Preamble

The House met at Ten o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

IMPORT DUTIES (FLAKE GRAPHITE)

10.5 a.m.

The Minister of State, Board of Trade (Mr. George Darling): I beg to move,
That the Import Duties (General) (No. 3) Order, 1967 (S.I., 1967, No. 468), dated 23rd March, 1967, a copy of which was laid before this House on 31st March, be approved.
This is a very small Order. It makes a minor change in the definition of flake graphite which comes in duty-free. It is designed to provide a clear legal basis for the interpretation of the tariff on this product and it also gives a tolerance of 2 per cent. on the specified 85 per cent. carbon content of duty-free graphite. The industry mainly concerned has requested that this tolerance should be allowed.
The Order achieves the first of these objectives by supplementing the density test in the former tariff sub-heading by a second test which ensures that only graphite in particles large enough to be seen to be flakes will be classified as flake graphite in the tariff. It achieves the second objective by reducing from 85 to 83 per cent. the carbon content

required for flake graphite classified to the duty-free sub-heading.
The Order therefore satisfies the need of the consumer industry for a tolerance, makes the legal position clear and simplifies the administrative work of Her Majesty's Customs.

10.7 a.m.

Mr. Eric Lubbock: I wish to ask the Minister of State only one question. I note that the density test specified in the definition is in metric dimensions whereas the additional clarification which the right hon. Gentleman mentioned has been added to the qualification is in inches. The Government's policy is that we should convert entirely to metric units and we are in process of doing this over a period of years. I wonder why it has been necessary to use inches in this additional definition. If the right hon. Gentleman can give an explanation, I shall be grateful.

10.8 a.m.

Sir John Vaughan-Morgan: I am grateful to the Minister of State for his extremely clear explanation of the purpose of the Order. No doubt the right hon. Gentleman will have satisfied himself with his own eyes about how the test is carried out and that there is no substantial change in the method which is being employed.
I agree entirely with the point raised by the hon. Member for Orpington (Mr. Lubbock). This might have been a classic opportunity to make a wholehearted switch to the metric system. I


assure the hon. Member and the Minister, however, that the ultimate result will be the same whichever system is employed, because this is more or less a traditional method which has been going on for a very long time.
I should like to ask the Minister one or two questions. First, why and on what evidence has he made the switch from 85 to 83 per cent.? What percentage of the flake graphite imported into this country is affected? The right hon. Gentleman will, I think, find that the bulk of flake graphite which is imported does not bear duty in any event and is well below the 83 per cent. tolerance, let alone the 85 per cent. tolerance.
I am tempted to ask the Minister, for the benefit of the large and attentive House which is listening to him, to give us a lecture on the properties of flake graphite and how it differs from amorphous graphite. No doubt he will be able to do so. If, however, he cannot, I should be delighted to do it for him.
Furthermore, how did the demand for the change arise? This should be stated. The Minister has spoken of the industry, but he might be a little more specific about the reason for the change, as well as giving one or two more general details which I would like to have.

10.10 a.m.

Mr. Patrick Jenkin: I, too, was intrigued by the point which caught the attention of the hon. Member for Orpington (Mr. Lubbock). This seems an extraordinary definition, mixing the metric and inch systems haphazardly. I understand that there are no objections to the Order on the part of any United Kingdom interest and therefore perhaps I may add one or two more brief points.
First, my researches have shown that the intention of altering this tariff heading was notified as long ago as 20th September, 1963, in the Board of Trade Journal of that date on page 618. It is now almost exactly three and a half years later. It seems an unconscionable time to have taken in reaching the revised definition which, as the right hon. Gentleman has said, adds one or two new points to those there already.
Secondly, we are left with a position in which graphite that does not come

within the terms of the tariff heading set out in the Order comes under other graphite and as such is subject to a 10 per cent. duty. I understand that there is no United Kingdom production of graphite, and this therefore raises the question of why one needs a tariff on it at all. I imagine that there must be some Commonwealth interest.
In that context, I would point out that the common external tariff in the Common Market for all graphite is nil. Presumably, therefore, this will be something that negotiations will have to cover—I am not aware that the matter was dealt with in the previous negotiations—or, alternatively, no special arrangements will be made and, if we join, all graphite will enter this country tariff-free.

10.12 a.m.

Mr. Darling: The explanation as to the mix-up of inches and grammes and cubic centimetres was given by the right hon. Member for Reigate (Sir J. Vaughan-Morgan). This is the traditional definition and until the industry has moved over to the metric system completely, it was thought advisable to keep the definition as it is. I agree that it is a narrow point of timing. When we switch to the metric system generally, the definition, along with very many others, will have to be changed. But at the moment it is just a matter of judgment whether we change it now or wait until more general changes are being made.

Mr. Lubbock: Surely it would be easier, when opportunity arises, that the change should be made as and when rather than that it should be left until the vast task which the right hon. Gentleman has just described gets under way. Surely it will be more difficult to make all these changes simultaneously rather than as opportunity occurs.

Mr. Darling: There is something in that argument, but until there is much wider change, particularly in linear measurement, which is still very much in inches in this country, there is an argument for keeping this definition as it is for the time being. But I take the point.

Sir J. Vaughan-Morgan: There is a lot of substance in what the Minister of State is saying, but this cannot be left only for the industry. I suggest that when


such Orders come forward the equivalent in metric measurement should be given with the inches. This has been the practice in large parts of the industry dealing with this material and it would be much appreciated and understood.

Mr. Darling: I take that point and will pass the suggestion on to those concerned. The right hon. Gentleman asked me if I knew the difference between flake graphite and amorphous graphite. I would be glad to listen to any lecture on the subject he cares to give. I know that this is of considerable interest to him.
The reason that we have to note the difference in this context is that amorphous graphite is produced in the Commonwealth. It is an important item in the economy of Ceylon. This also explains why there has been what appears to be a considerable delay in bringing the Order forward. Discussions with Commonwealth countries, particularly the emerging countries which are moving over to an industrial economy, take a considerable time, as I am sure the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) appreciates, particularly because these countries are looking to their future economy rather than coming to decisions based on past experience or perhaps present practice.

These discussions took longer than we wished for the very good reason that the new definition had to be discussed with Commonwealth interests.
This leads me to the point made by the hon. Gentleman about what would happen if we were to apply to join or entered the Common Market. I speak here without really careful thought, but I would imagine that, where a Commonwealth interest such as this was involved, there would be further discussions in dealing with a commodity in which, for example, as the hon. Gentleman pointed out, the E.E.C. tariff was nil. The reason why we are dealing with flake graphite in this way is that some firms in this country would prefer a lower definition than 83 per cent. They would prefer the carbon content specified in the definition to come down to 75 per cent. That proposition has been opposed by Ceylon on the argument it would injure Ceylon's graphite industry. Therefore, we have concluded that the best thing is to give the 2 per cent. tolerance that firms in the industry first asked for.

Question put and agreed to.

Resolved,
That the Import Duties (General) (No. 3) Order 1967 (S.I., 1967, No. 468), dated 23rd March, 1967, a copy of which was laid before this House on 31st March, be approved.

Orders of the Day — ROYAL ASSENT BILL [Lords]

Order for Second Reading read.

10.18 a.m.

The Attorney-General (Sir Elwyn Jones): I have it in Command from the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Bill, has consented to place Her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
I beg to move, That the Bill be now read a Second time.
This is a modest but useful Measure of constitutional reform. Its main effect will be to end the often unhappy interruption of business caused by Black Rod's entry into the Chamber to summon the House to Royal Commissions for giving the Royal Assent in another place.
Sometimes these interruptions have occurred during a debate on highly contentious matters and there has been a good deal of resentment not only at the loss of Parliamentary time that has been involved but at the breaking of the thread of a possibly eloquent speech and the disruption of a debate that may be caused. Further, it has been less than courteous to Black Rod, as it has been damaging to the dignity of the House, from time to time to have made him less than welcome when the responsibility for the timing of his appearance here has not been his but has been arranged through the usual channels.
Accordingly, as part of the reform of Parliament, the Government decided last year to create a new and more streamlined procedure for signifying the Royal Assent. This intention was announced to the House in December by my right hon. Friend the Lord President of the Council and Leader of the House of Commons, and in another place by the Lord Privy Seal. The Bill as it stands has been promoted with the general agreement of Members on both sides of the House, and with the general approval of Her Majesty.
At present the Royal Assent can be given either by the Sovereign in person or by Royal Commission under an Act

of 1541. The last occasion on which the Royal Assent was given in person was in 1854 when Queen Victoria assented to five Acts of Parliament. Perhaps I might be permitted to note on this the last day of the Budget debate that one of those Acts was a Customs Act which fixed the duty on rum imported into the United Kingdom at 8s. 2d. a gallon, but for some reason only 6s. if imported into Scotland. Perhaps that was in view of the competition from the native spirit there. Ireland came off even better. The duty on rum imported into Ireland was only 4s. 4d. I regret that there was no special provision for Wales. When one contrasts those figures with the present position whereby the full duty is £14 14s. 6d. per proof gallon, one sees how, for better or for worse, times have changed.

Mr. Emrys Hughes: Did Queen Victoria give or refuse her consent to the Act dealing with rum?

The Attorney-General: She most readily nodded her approval when Mr. Gladstone, I think it was, introduced the Measure, but perhaps I must not be tempted to pursue too far the history of this matter.
As I have said, the alternative Royal Assent procedure through Royal Commissions was introduced under an Act of 1541. It will tickle Mr. Speaker's historical expertise if I remind the House that that Bill arose because Henry VIII had found it necessary to promote a Bill entitled, "The Bill of Atteynder of Mestres Katherin Howarde late Queen of England and divers other psonnes her complices". As the Bill provided for the beheading of his wife for alleged adultery with Thomas Culpeper, even Henry VIII may have felt a certain indelicacy about giving his assent in person to the Bill, particularly as he had promised to spare Catharine Howard's life. Accordingly, but ostensibly only to save time, the Bill provided that Royal Assents could be validly given by the King signing letters patent under the Great Seal followed by a declaration before both Houses by a representative on his behalf. The Bill was passed, and was itself given Royal Assent by a Royal Commission set up for the purpose.
Once its attainder provision were spent in the extremist form by the beheading


of Mistress Howard, the provisions relating to the Royal Assent remained for future use. However, Royal Assents by Commission under the Act of 1541 continued for some time to be rare. When they did occur, the procedure followed that started when the Act of 1541 itself received the Assent. The King signed letters patent under the Great Seal signifying his assent to the Bill in question, and at the same time appointed a Royal Commission, at first usually consisting of the Lord Chancellor alone, but later of three or five peers including the Lord Chancellor, to declare the fact to both Houses of Parliament assembled together. The procedure was followed by the Commissioners in another place. That procedure was mutatis mutandis the same as that followed when Royal Assent was given by the King in person.
But until the end of the 17th century the Royal Assents in person were the rule. Charles II gave the assent in person 30 times out of 33; James II 3 out of 3; William III 62 out of 64; and Queen Anne, rather less often, 39 out of 56. It was only in the time of the Hanoverians that Royal Assents by Commission definitely replaced Royal Assents in person. This may have been partly because tie early Georges had only a small command of the English language. But a more powerful reason was no doubt the great increase in legislation which occurred in the 18th century, especially of local and private Acts.
In the 19th century familiarity seems to have bred contempt, and there were occasions on which Acts were included in the Commission even before the House of Commons had had the opportunity of considering the Lords Amendments. When this happened to an Act for better raising and securing the Fund for the Relief of Widows and Children of Burgh and Parochial schoolmasters in Scotland, a Select Committee was set up and those responsible were called to account. This does not seem to have had very much effect, as the same thing seems to have happened again in 1844. It does not happen today to the best of my knowledge and belief.
The Bill consists of two Clauses. Clause 1 creates a new procedure of Royal Assent by notification to each House by the Speaker of that House.
When the Bill becomes law, it is intended that unless there is any special reason to the contrary the new procedure of notification shall be used on all occasions. The only exception will be that Royal Assents by Commission will be held at Prorogation—if there are then any Bills awaiting Royal Assent—and on at least one other occasion in each Session—no doubt at the beginning of the Summer Recess. This is to meet the general demand that the traditional ceremony should not be allowed to die out of Parliamentary life altogether.
The Queen will continue to signify Her Royal Assent by signing Letters Patent issued under the Great Seal. The Letters Patent will not only signify assent to the Bills in question, but will also command the fact to be notified to each House of Parliament.
On the sealing of the Letters Patent the Clerk of the Crown in Chancery will issue a certificate to the Speaker informing him that Royal Assent has been signified to the specified Bills. This certificate will be Mr. Speaker's authority for notifying the fact of Royal Assent to the House of Commons. This procedure is analogous to the certification by the Clerk of the Crown to the Speaker of returns to by-election writs. The Lord Chancellor's authority to notify another place will stem from the Letters Patent themselves and no further document is required in the case of proceedings in another place.
Arrangements will then be made for the Lord Chancellor and the Speaker to notify the two Houses of the Royal Assent. This will be done on the same day and as nearly as possible at the same time, though it is not essential that notification should be simultaneous, and it can be made at any point in the proceedings.
When the Speaker and the Lord Chancellor—or their deputies—notify their respective Houses it is intended that they should do so in the following words:
I have to notify the House in accordance with the Royal Assent Act 1967 that The Queen has signified Her Royal Assent to the following Acts: …
Then will be read the Short Titles of the Acts assented to.
As the House will see, it will be a simple and expeditious procedure. The requirements of the Royal Assent will not


be completed until both Houses have been notified, so that a Bill will not become law until the second House—whichever it may be in the particular case—has been notified. It will be the date when that happens which the Clerk of the Parliaments will endorse on the Bill. Under the Acts of Parliament Commencement Act, 1793, an Act comes into force on the first moment of the day of the date which has been endorsed on it by the Clerk of the Parliaments.
It is intended that notification should normally be on the same day in both Houses. In the case of an urgent and important Bill, if any practical difficulties about notifying the Houses separately should arise at any time a Royal Assent by Commission could be arranged at short notice.
This new procedure of Assent by notification is generally thought to be the best, because the simplest, of all the various new procedures which have been canvassed. Other proposals which have been considered are that Royal Assents by Commission should continue but should always be held at 12.30 p.m., or some other specified time in the morning or evening, or after Question Time, or should be held in the Queen's Robing Room or elsewhere and attended only by delegates from each House. After much examination it became clear that the notification procedure was not only the best but was the only proposal which stood any chance of the general acceptance necessary for a Constitutional Bill of this kind.
Clause 1(2) saves two features of the existing law. The first is the power of the Queen to give the Royal Assent in person if Her Majesty wishes. The second is the procedure under which the Clerk of the Parliaments endorses a Bill which has received the Royal Assent—by whatever method—with the appropriate and traditional Norman-French formula. Thus, the traditional Norman-French formula will continue to be endorsed on all Bills.
Clause 1 also preserves the traditional ceremony of Royal Assent by Commission and also creates the new procedure of Royal Assent by notification. Thus for an Act of Parliament to be "duly enacted" two conditions must be satisfied. First, the Royal Assent must be

signified by Letters Patent under the Great Seal signed by the Queen. Secondly, the Royal Assent must either be pronounced
in the form and manner customary before the passing of this Act
—that is, there must be a Royal Assent by Commission—or it must be notified to each House of Parliament sitting separately by the Speaker of that House or the person acting as Speaker at the time.
Clause (1,a) validates Royal Assents by Commission by simply referring to
the form and manner …
—of pronouncing Royal Assent—
… customary before the passing of this Act".
Clause 2(2) repeals the Royal Assent by Commission Act, 1541, which is the present authority for using that procedure. The Bill adopts this method for reasons of Statute law reform. The Law Commission is going through the Statutes chronologically from the beginning, with the aim of repealing—with savings wherever necessary—all ancient Acts which do not merit a place in the modem Statute Book.
When this Bill was first mooted the Law Commissioner's work on this project had already reached well into the 16th century, and the Act of 1541 was under consideration for repeal with saving. If the present Bill had simply referred to the Act of 1541 without repealing it that would have ended any hope of tidying up this part of the Statute Book for some time.
It is anticipated that notifications will take a matter of seconds except where there are a number of Bills, and even then it will still be a considerable improvement on the half hour or more occupied by a Royal Assent by Commission.
As is appropriate for a constitutional Measure, this Bill has been promoted with the general agreement of all parties in both Houses, and with the approval of Her Majesty. It is a useful Measure of reform, and I commend it to the House.

10.35 a.m.

Sir John Hobson: I am sure that the House will he grateful to the Attorney-General


for his careful exposition of the Measure and his account of its historical background. The House will also be grateful to Her Majesty, and would wish to express its gratitude to her, for placing her prerogative and interest at the disposal of Parliament in a matter which largely concerns our own convenience. This Measure being a constitutional one, it is, as the Attorney-General has said, passed with the concurrence of all parties in both Houses of Parliament. I therefore want to express formally the support of the Opposition and their agreement to the Bill.
We also welcome what the Attorney-General has said about the present intentions of the leaders of all parties, that the present form and ceremony should be continued at least once during each Session, and on Prorogation if any Bills require the Royal Assent at that time. I strongly support that intention, because the present ceremony, while an inconvenience to the House in the course of its debates, embodies much of our Parliamentary history. It is a colourful and fascinating piece of pageantry and, on top of this, it is an open and visible symbol and reminder of the legislative powers of the Crown and Parliament, and a living sign of the necessary concurrence of the Crown and both Houses of Parliament in the passing of legislation which affects all our citizens.
We also welcome the preservation of the opportunity of the monarch to give the Royal Assent in person although, in view of the lapse of time since it last happened, the prospects of that occurring do not seem substantial.
I want to ask the Attorney-General a few questions. First, is the repeal of the 1541 Act only for the purpose of tidying up the Statute Book? If so, it seems a rather unnecessary reform, because the whole of the procedure, until this Bill is passed, depended on the giving of the Royal Assent by Commission in the Upper House, under Section 2 of the 1541 Act.
The circumstance in which this change came about was a very interesting piece of legislative history. We have all listened with the greatest interest to the account given by the Attorney-General of the development and use of that procedure. It seems not objectionable but

slightly unnecessary simply to tidy up the Statute Book and abolish statutory provisions which were the foundation of the original procedure which we intend to preserve.
Am I right in assuming that Acts of Parliament will continue to begin with the present form of words—
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lord's spiritual and Temporal …"?
I presume that that will continue to be the usual form of Acts of Parliament in future.
I am not quite clear about the position of the Clerk of the Crown in Chancery. Under the new procedure I believe that it will be for the Clerk of the Crown in Chancery to see to the notification of the passing and of the sealing of the Letters Patent under the Great Seal to the Speakers of both Houses. There is no statutory provision to that effect. It may be that it is unnecessary, but I should like to know whether the Clerk to the Crown in Chancery, as such, is acting as agent for the Crown or as an official of the Lord Chancellor's Department.
If the latter should be the case, is it usual for the passing of Acts or Deeds under the Great Seal to be notified to the two Houses of Parliament by the Clerk to the Crown in Chancery? I think it is, but I should like the right hon. and learned Gentleman's confirmation.
These matters may seem a little technical but they should be clear. We should remember that, through the disappearance of the Clerk of the Hanaper in Dublin, the rights of the Irish peerage were lost. One never knows, when setting up these new procedures, what may be the effect of the alteration in the status of one of the links in the procedural machine. I do not think that there is any risk of the disappearance of the office of Clerk of the Crown in Chancery, but no doubt the Attorney-General would inform us in what constitutional capacity the Clerk is acting in sending notification to the Speakers of both Houses.
The Bill will be largely for the convenience of this House. It will, on most occasions, alter the ancient, symbolic public ceremony, whereby the Crown in Parliament has hitherto made the laws of the Kingdom. Although we have expressed the Opposition's agreement to the


Bill, I know that I speak for every hon. Member on this side when I say that we are delighted that this ancient ceremony is to be preserved and will from time to time continue to be used.

10.42 a.m.

Mr. Emrys Hughes: I agree completely with the Bill's main purpose, even if it means that I have to write a footnote to the book to which the Leader of the House referred, "Parliament and Mumbo-Jumbo", to explain that part is out of date. I only wish that I could write that other pages were out of date as well.
The ceremony of Black Rod knocking at the door, with all the time spent going to and fro and interruption of speeches, has led us to regard Black Rod as a public nuisance, which is not fair to the gentleman concerned, who is merely carrying out his traditional duties. When my hon. Friend the Member for Kettering (Sir G. de Freitas), a very conservative Labour member, continued the debate on such an occasion when the rest of the House was absent, he was setting a precedent which might have been followed.
I therefore believe that the Government have taken this step in the interests of this House and the other place. On the last occasion, when my hon. Friend carried on speaking, we were discussing the B.B.C. and the Postmaster-General was making an eloquent defence of the B.B.C. Then came that knock at the door. I never object to closing the door, but only to reopening it. When we went to the House of Lords—it was one of the few occasions that I went to see the procedure—I found that we had interrupted a very important debate on Rhodesia. There was thus a great deal of time wasted. I believe that the general opinion of the House that time was that this ceremony should be discontinued.
This is the first Royal Assent Bill since 1541, in the time of Henry VIII. In another place the Lord Chancellor referred to that Act as an "Act of delicacy". I have never heard any reference to the delicacy of Henry VIII before. I am a charitable man, and I do not want to deal with the background of his matrimonial troubles and their

consequences, but he did some strange things—beheaded his wives, established the Church of England and debased the currency—and, in retrospect, we all have to admit that Henry VIII was a bit of a monster.
Of course, his delicacy arose because he did not want to be regarded as personally responsible for having assented to his wife's execution, which was a strange act of delicacy, probably thinking that when he went to the other place—not the House of Lords, but the other "other place"—it might be held against him.
This has gone on through the centuries. My right hon. and learned Friend explained that the Hanoverians did not come because they did not understand the language. There was another reason. After all, the Hanoverians were not very popular. That distinguished writer Thackeray wrote:
George the First was wicked and vile,
Viler still was George the Second,
None ever heard good of George the Third;
When George the Fourth to hell descended,
God be praised—the Georges ended!
But he was rather premature!
I want to make certain suggestions to my right hon. and learned Friend. I do not understand why, since the last occasion was the arrival of Queen Victoria, who seems to have been strangely interested in the question of rum—

The Attorney-General: In the memory of the great Queen, I must point out that four other Acts were passed on that occasion and that one was the Common Law Procedure Act, one of the most important pieces of law reform ever. I say that in honour of her late Majesty.

Mr. Speaker: This is a digression. I hope that he will not digress too far.

Mr. Hughes: I regarded it as a digression, Mr. Speaker, and was not aware of the other Acts, which my right hon. and learned Friend did not mention in his speech.
Why was it necessary to introduce in Clause 1 words to the effect that Her Majesty could revive this ancient custom and come in person? If this custom has passed into limbo, what is it doing in the Bill? The right hon. and learned


Member for Warwick and Leamington (Sir J. Hobson) said that he did not think that Her Majesty would come. If Her Majesty is not likely to come, why on earth is this in the Bill? If a Royal Assent Bill had to be introduced, the Government could have made a job of it.
We are living in the modern age, and the Royal Assent and its constitutional implications should have been carefully considered. It is not, as the right hon. and learned Member said, part of our legislation. It is taken for granted in our constitutional law that Her Majesty must give the Royal Assent, whether she approves of the legislation or not. Nobody now believes that the Crown has the slightest power to say "No" when Parliament has said "Yes". This has therefore become automatic; the Queen has put in front of her a considerable amount of legislation which everyone assumes she does not read.
When, say, the Iron and Steel Bill went for Royal Assent, the Queen might have said, "Another Steel Bill? What is this about?" Her advisers would say, "If you want to find out all about the Iron and Steel Bill, there is a full report of the Committee extending to 500 or 600 pages." I can hardly imagine that Her Majesty really wants to be bothered with the details of legislation. I can imagine Her Majesty saying, "If Parliament says that Royal Assent has become automatic, why on earth do I need to be putting my name to Acts of Parliament when my consent is automatic?" If that is so, we should apply the principle of automation.
I do not believe that Her Majesty should be troubled with going through these motions. Certifying that a Bill had gone through its procedure could be done by Mr. Speaker. I do not suggest that it be done by a computer, as a suggestion was made to do away with the Law Courts by a computer, but I suggest that a very small machine, which Mr. Speaker could press in his office, would do everything completely satisfactorily.
If there is no significance in Royal Assent, why should it continue? The argument is that we have to go through all these traditions simply because they were done in the time of Henry VIII, the Georges and all the rest. We have to do it at this time of day, apparently,

because our traditions continue. I believe that Oliver Cromwell did a very good job in his time, but, unfortunately, his successors went back on what he did. Nevertheless, I think that the time has come, if we are having a Royal Assent Bill, to rationalise the situation. Let us do away with hocus-pocus. Let us do away with the ancient traditions which have no relevance to modern history or to a modern setting.
I have been in the House of Lords when Royal Assent was signified by a Commission. Sometimes there were peers present who wore cocked hats and coloured robes. Taking off the hats was done in the traditional way. That is one of the scenes which made the late Sir Winston Churchill once refer to the House of Lords as mumbo-jumbo.
If the Attorney-General is in favour of the Queen coming down in person, ought we not to consider the position and say that if the Queen is to come to Parliament at all to signify her Assent to Bills, she should come to the seat of power, the House of Commons, and not the other place? A good many thoughts come to my mind for discussion on the Bill. We can improve it, and I hope that I shall be able to contribute something to its improvement in Committee.

10.53 a.m.

Mr. Eric Lubbock: The final suggestion of the hon. Member for South Ayrshire (Mr. Emrys Hughes) is not a bad one. After all this time, we ought to let bygones be bygones and allow Her Majesty to come into the House of Commons again. That may seem a revolutionary suggestion, like many of the other suggestions that the hon. Member has made, but why not let us consider it? I do not know whether it would be appropriate for the Committee stage of the Bill. No doubt the hon. Member, with his customary ingenuity, will think about drafting an Amendment before the Bill goes into Committee.
As regards the total abolition of Royal Assent, which was another of the hon. Member's themes, I am not at all sure that I agree with him, because the import of that is ultimately that one does not need the monarchy at all. As the right hon. Member for Easington (Mr. Shinwell) said over the weekend, in


view of the work of some of the presidents in the rest of the world, and one of them in particular, I think that we should be extremely thankful that we have a constitutional monarchy.

Mr. Emrys Hughes: I hope that the hon. Member is not casting a reflection on President Johnson.

Mr. Lubbock: The right hon. Member for Easington did not say to which president he was referring, but I am sure that the hon. Member can guess, as I did when I read the remark of his right hon. Friend.

Mr. Speaker: Order. Whichever president the right hon. Member was referring to, he has nothing to do with the Royal Assent.

Mr. Lubbock: No, Mr. Speaker. I hope that he never will have anything to do with it and that we shall not have a president giving presidential assent at some time in the future.
Everyone has agreed that the periodical visits of Black Rod to this House are infuriating. The example mentioned by the hon. Member for South Ayrshire, when several speeches were made in the absence of some hon. Members in another place, was a particularly striking one. The right hon. Member for Kettering (Sir G. de Freitas) continued the debate, and so did a number of others of us. I remember being on my feet when you returned, Mr. Speaker, and having my remarks abruptly cut short. That was a demonstration of the resentment of hon. Members against having debates interrupted when they reach an important stage. It is this factor rather than the small amount of time that may be lost which is the important justification for the Bill.
I rather think that the hon. Member for South Ayrshire, in his book and in his reflections on Parliamentary reform, tends to exaggerate the loss of time caused by our traditions and ceremonies. It is not so much that; it is the interruption of the thread of our discussions which is a far more important reason for not having the summons to another place which occurs under the present arrangements. It will be interesting if, when he replies, the Attorney-General can say how much time is lost in an average

Session by our summonses to another place.
When the right hon. and learned Gentleman went through his historical summary of the legislation on Royal Assent, the interesting thought occurred to me that if the procedure which has been customary for centuries was used in giving assent to the Act of 1541, every piece of legislation since then must be invalid, because one could hardly use this new procedure until the Act which set it up had been passed and Royal Assent had been given to it. It is, I suppose, too late to remedy that by applying some other procedure to all the legislation which we have passed in the four centuries since the time of Henry VIII.
As to the question of the rum, the Scottish Members of the House at that time could not have been doing their duty, because it appears from what the Attorney-General has said that rum must have been cheaper in Scotland than in the rest of the United Kingdom. Where was the defence of the whisky interests which one would expect to hear when it was proposed that lower rates of duty should be applied to rum in Scotland than in the rest of the United Kingdom?
I agree with the hon. Member for South Ayrshire that, if the visits of Black Rod are to be abolished for most of the time, one must consider carefully whether they are needed at all. I understand from the Attorney-General that the single visit in each Session will take place toward the beginning of the Summer Recess. Obviously, it will have to take place while the House of Commons is sitting. The right hon. and learned Gentleman did not say whether arrangements have been made for the single visit of Black Road in a Session to be timed to suit the greatest convenience of the House. If that is the case, I have no objection to the maintenance of the ceremony. I cannot see any very important arguments either for or against it, but it might be worth while considering arranging it so that Black Road comes in the mornings, because every time I have been here and taken part in debates in the mornings, I have seen very few hon. Members in the Chamber. There are four of us at present on this side and three on the Government side.

Mr. David Winnick: Four.

Mr. Lubbock: I must apologise to the hon. Member for Luton (Mr. Howie), whom I did not see. The minimum inconvenience would be caused to the House if only eight hon. Members had to have their discussions interrupted by a visit to another place. Here an important advantage may be gained from the initiation of morning sittings.
If the Royal Assent has to be given at the same time in both Houses, I do not believe that those in another place have yet advanced to the stage where they have sittings in the morning so, if my suggestion were accepted, it would not be possible for exact simultaneity of Royal Assent to be given in both Houses. I understood from the Attorney-General, however, that this was not strictly necessary, and that there was provision for the Royal Assent to be given at slightly different times in the two Houses. If the right hon. and learned Gentleman can assure us that in this House the Royal Assent will always be given in the morning, and that it will be towards the beginning of the Summer Recess, I would say that this Bill might prove to be a useful if minor reform of our Parliamentary procedure.

11.1 a.m.

Mr. David Winnick: I regard this Bill as a minor but important piece of modernisation and one for which I have, with other hon. Members, been pressing ever since I became a Member of Parliament. When I first came to the House 12 months ago and after I had been here for two weeks, I left one day the desk I had opposite the House of Lords and came into this Chamber. It was more or less empty. Since it was only 5 o'clock in the afternoon, I found it very difficult to believe that the House had either adjourned or had been counted out. It was then kindly explained to me that Black Rod had interrupted the proceedings.
I then decided, for the first, and I believe, for the last time, to go to the other place to watch the Royal Assent being given to legislation. I found it virtually impossible to believe, in this day and age, the sort of ceremony I saw taking place there. It seemed rather strange that such very feudal procedures should have continued into the 'sixties.
Since then, I have been present in the Chamber when a number of very impor-

tant debates have been interrupted by the arrival of Black Rod. I always have a certain amount of sympathy for Black Rod. As my right hon. and learned Friend has pointed out, Black Rod has then been carrying out his traditional duties, but his welcome here has not always been very kind. On the last occasion but one he interrupted a debate on the Common Market, so that it was understandable that very many hon. Members on both sides were not able to give him a very enthusiastic welcome.
If we are keen to lecture the nation on modernisation and the ending of restrictive practices, we ourselves, in our place of work, must always be willing to discontinue some of our own restrictive practices. I find it impossible to believe that if those who work in industry and commerce and who receive lectures from hon. Members on both sides about ending restrictive practices and the need for modernisation, were to come here and see some of our procedures, they would not consider that we were being humbugs and hypocrites.
How can we lecture the nation on modernisation when we have what I frankly confess is to me this farcical procedure in which Black Rod marches down through the Central Lobby and the Members' Lobby. The door is closed in his face, and he has to knock three times for entry. What possible justification can there now be for this ceremony? We know that in centuries past there was a great historical justification for it, when the Commons wished to show supremacy over the Executive, but there can be no such justification for it now.
Frankly, I am a little disappointed with this Bill. I should have liked to have seen it go the whole way by abolishing the entire procedure. However, I am always willing to compromise, and this Measure goes some way to what I should eventually like to see done. I congratulate my right hon. Friend the Leader of the House. As we now have a Leader of the House who, for once, is willing to put into practice such reforms as morning sittings and the changing of the Black Rod procedure, I can even forgive him for not calling me at the 1961 Labour Party conference when we debated the Common Market.
Reforms such as this are welcome. This Bill represents a minor form of


modernisation. I do not wish to exaggerate its importance, but it is part of the process of bringing our House up to date and doing away with much of the out-of-date procedure which no longer has any justification. I am a great believer in Parliamentary democracy, and believe that the only alternative to it is some form of dictatorship, but it strengthens, not weakens, our democracy when we bring our practices up to date. This Bill goes some way towards achieving that objective.

11.5 a.m.

The Attorney-General: I am glad that the House has felt able—

Mr. Deputy Speaker (Sir Eric Fletcher): Order. The right hon. and learned Attorney-General can speak for a second time only with leave of the House.

The Attorney-General: Then, Mr. Deputy Speaker, perhaps I may have the leave of the House to deal with one or two matters that have been raised in this debate.
I express the Government's attitude that this Bill has received general approval from both sides—more enthusiastic, perhaps, in some quarters than in others. It is a modest but significant Measure of modernisation of Parliamentary procedure and, perhaps, a precursor of other changes to come.
The right hon. and learned Gentleman the Member for Warwick and Learning-ton (Sir J. Hobson) raised three specific matters. He queried the decision to repeal the 1541 Act. The reason for doing that was purely for the purpose of assisting in the tidying-up procedure in which the Law Commission is now actively engaged in the process of modernising our Statute Book. The Bill contains all the information that the 1541 Act itself contained, so nothing is lost by replacing that Act. The curious thing is that the 1541 Act is silent as to the procedure it authorised; it simply requires that both Houses of Parliament be assembled in another place.
The hon. Member for Orpington (Mr. Lubbock) had the courage to put in question the whole of the legislation that has flowed since that date and which has been approved by the process of Royal

Commission because of what he perhaps rightly suggests may be the doubtful validity of the validating procedure, or the purportedly validating procedure of the 1541 Act. Happily, it is now too late to question the validity of the 1541 Act. It is clear that it has been validated by the law and practice of Parliament. So we can rest happy about the legislation that has been passed since that time.
The right hon. and learned Gentleman the Member for Warwick and Leamington asked whether the enacting words in Bills would remain the same. The answer is in the affirmative. He asked about the constitutional rôle of the Clerk of the Crown. The Clerk of the Crown is at once an officer of the Crown and an officer of both Houses of Parliament. In communicating the Royal Assent, he will be acting as Clerk of the Crown and not as Permanent Secretary to the Lord Chancellor, so that his constitutional position in this exercise will be as Clerk of the Crown. But, as I have said, he is at once not only an officer of the Crown but an officer of both Houses of Parliament, so that there is no derogation in any way of the authority of this House by the proposed machinery.
I was asked whether the timing of the proposed visits of Black Rod—which, as I said, in practice we contemplate—will be made to meet the convenience of this House. I am sure that, in the light of experience in the past, appropriate arrangements will be made to ensure that, on occasions which will then be somewhat ceremonial, there will be no clash with the business of this House and no disturbance of debate.
I was asked how much time was being and had been lost by the procedure of going to another place for the Royal Assent by way of Royal Commission. It is estimated that there had been 9 to 10 Royal Assents per Session in the last three years. Each lasts about half an hour or slightly less, so that about four hours has been lost each Session by this procedure. But I cannot help thinking that it is not so much the time that has been taken but the disturbance of the debate which has most disturbed the House and has been the main motive for this change.
My hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes), ever watchful, has questioned the necessity of


retaining Clause 1(2). The House may feel it right that we should retain, should Her Majesty desire it, her power herself to declare her Royal Assent in Parliament. As I have said, she has given the Bill her approval and for that the House is grateful. It is a modest Measure of constitutional reform and I am happy that it meets the general approval of both sides of the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Howie.]

Committee Tomorrow.

NATIONAL HEALTH SERVICE (EXECUTIVE COUNCILS)

11.12 a.m.

Mr. W. R. van Straubenzee: I beg to move,
That an humble Address be presented to Her Majesty, praying that the National Health Service (Executive Councils) Amendment Regulations 1967 (S.I., 1967, No. 278), dated 24th February, 1967, a copy of which was laid before this House on 1st March, be annulled.
While I am more than aware that the Minister of Health understands this matter perfectly, it is nevertheless important that I should briefly place on record, in moving this Motion, that the only method open to the Opposition to secure the discussion of a Statutory Instrument of this nature is to appear at the outset to be praying against it. I make that clear because, both in this case and the one which follows, unless a wholly unforeseen matter arises, we are broadly in favour of what the right hon. Gentleman is doing.
This is a very narrow matter. It arises out of the National Health Service (Executive Councils) Regulations, 1954, which, for this purpose, are the instrument under which Executive Councils operate. They were indeed a consolidating Measure. The sole and narrow point of what we are discussing now is the power of these executive councils to pay a subscription to associations of themselves, raising from £20 the amount they may subscribe without reference to the Minster and to £50 the amount they may subscribe with his approval.
I would like the right hon. Gentleman to be good enough to explain a little further what these associations of executive councils are. I am sure he will agree that, in all these administrative matters, it is valuable from time to time for the light of publicity to be able to play upon the operations of various aspects of the National Health Service and before the House can judge whether it would be appropriate to increase these subscriptions it is necessary to know a little more of what they do.
I do not know that many people are aware that these councils operate a form of association. For example, do they do so by geographical region? Do they do so by medical interest? I myself think that they cannot be doing so by way of medical interest. Do they do it by problem—for example, such as problems which affect a country district or problems which affect urban districts? I understand that in the recent past one at least of the associations, or the association, has been discussing the question of car parking for doctors which, as we all appreciate, is very difficult in built-up areas. It would be helpful to know the associations for which the Regulations are designed. May we know in rather more detail what it is they do and the method by which they work?
Presumably the Minister has tabled this Statutory Instrument to cope with a fall in the value of money. But the new sums are still very small. We are talking in terms of petty cash. Therefore, one asks whether the amounts involved are commensurate with the results achieved. Is this money just what is necessary for the every-day working expenses of an association of councils? Ought we seriously to consider something more radical and drastic in terms of consultations of this kind? It would be very helpful equally if the right hon. Gentleman would say how many higher subscriptions he has already authorised under the Regulations as they stand at present. Has he had a large number of applications to go above the present figure of £10? Is this perhaps one of the reasons which led him to feel that the time had come for him to give the greater freedom now embodied in this Statutory Instrument?
Those are the essential matters. I want to draw his attention also to two


very small points. The right hon. Gentleman will notice that the pilot regulations—the 1954 Regulations—were a Consolidation Measure. This will be appropriate to the next discussion we have, if we get that far. It is very convenient to have the whole thing under one roof, as it were.
Secondly—and this is merely for my own interest—apparently this Statutory Instrument will not apply to the Isles of Scilly. I am not going to make some lighthearted reference to holiday resorts, or something of that sort, but I am intrigued by this. Is it that the 1954 Regulations do not apply to the Isles of Scilly? Is this a regular feature of National Health Service legislation? It is a small point but one which might intrigue the House.

11.20 a.m.

The Minister of Health (Mr. Kenneth Robinson): The hon. Member for Wokingham (Mr. van Straubenzee) has explained that the Regulations to which this Motion is addressed allow for increases in the subscriptions paid by executive councils to associations of executive councils. He asked me to explain just what these associations did.
The executive councils are the bodies responsible under Part IV of the National Health Service Act for making arrangements with practitioners to provide the family practitioner services in England and Wales. Many problems arise from day to day in the administration of these services which are not peculiar to one council but which affect them all. It is quite natural therefore that executive councils should have an association where these problems can be dealt with corporately. There are two associations affected by these regulations. One is the Association of Welsh Executive Councils, which, of course, represents the councils in Wales, and the other is the Executive Councils Association (England).
The associations serve as a forum for discussion of their common problems by members of executive councils. They also provide a means by which the collective voice of executive councils can be made known to the Minister. They provide a ready source of advice on all matters relating to the services and they

provide representatives of the management sides of the Whitley Councils which deal with pay and conditions of service of staff. Successive Ministers since the beginning of the Service have had reason to be grateful for the help provided by the associations. I, perhaps, have more reason to be grateful to them than any of my predecessors because of the burden I have asked them to carry in the last few years both during negotiations with the medical profession and more particularly since the introduction of the new scheme of remuneration for general medical practitioners. There main expenditure is on office expenditure such as printing and postage and travelling expenses of management committee members.
It seems fitting that there should be a separate association for Wales—I assume that the hon. Member would not wish to challenge this—in order that special attention can be given to the family practitioner services in that country and separate consultations conducted with the Welsh Board of Health about matters which affect Wales in general.
The existence of two associations representing executive councils was envisaged in the National Health Service Act, 1946, and provision was made in the Fifth Schedule for the payment of subscriptions of executive councils to such associations. Of course the cost of those subscriptions, like all executive councils' expenditure, falls on the Exchequer. In the 1954 Regulations, which these Regulations amend, the maximum annual subscription which each executive council can pay to the Association was £10 or, with the Minister's approval, £20. Twenty pounds has been paid for some time both to the Welsh Association and to the English Association, but hon. Members will realise that with only 15 executive councils in Wales compared with 119 in England the income derived by the Welsh Association was severely limited and it was becoming increasingly inadequate to allow it to carry out its functions properly.
The finances of the Welsh Association have not been in a healthy condition for some time. Expenditure exceeded income for each financial year ended 31st March in 1964, 1965 and 1966 and from July, 1965 the Welsh Association has had


separate representatives on the management side of the administrative and clerical staff; of General Whitley Councils, which has entailed extra expenditure. The position was reached towards the end of last year that the income of the Welsh Association at only £300 a year—the maximum which it could attain under the 1954 Regulations—was quite insufficient to cover expenditure. The Association was faced with a potential deficit of more than £200 a year. The English Association has not had such difficulties. With its much, larger membership the present subscription allows it to keep in balance. I have no reason to expect that the English Association will need an increase in the amount of subscriptions in order for it to keep its head above water, but if it has to increase its subscription beyond £20 a year, it can do so only with my agreement.
I am well aware that this is a time when we should keep expenditure to a minimum and I (Id not overlook this point when I made these Regulations, but it was clear that the Welsh Association was faced with increasing costs which could not be absorber' and it would have to close down, or at any rate lose its separate identity, unless I made arrangements for higher subscriptions to be made by each executive council than they had paid hitherto.
It seemed right to take the necessary steps to maintain the independent existence of the Welsh Association when the extra cost involved did not amount to more than £225 a year. I am accordingly authorising a yearly subscription of £35 for each executive council in Wales. With that explanation, I hope that the hon. Member will feel able to ask leave to withdraw the Prayer.

Mr. van Straubenzee: As always, the House is very grateful to the Minister for the detailed reply he has given. It is perfectly clear arising from this short but helpful discussion that the principal beneficiary, at any rate for the time being, will be the association covering Wales, and there is a great deal of sense for that continuing. I should not like to be the cause of in any way impeding that process and I therefore ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

NATIONAL HEALTH SERVICE (GENERAL DENTAL SERVICES)

11.25 a.m.

Mr. W. R. van Straubenzee: I beg to move,
That an humble Address be presented to Her Majesty, praying that the National Health Service (General Dental Services) Amendment Regulations 1967 (S.I., 1967, No. 259), dated 22nd February, 1967, a copy of which was laid before this House on 1st March, be annulled.
We now move to a discussion of a very much more detailed Statutory Instrument, No. 259, although the same proviso applies as that which I mentioned when moving the previous Motion. I think there are some points which should be gone into. I understand that, in accordance with normal practice, the Minister has discussed these amendments with those principally concerned. I am sure that in essence they make a great deal of sense dealing, as the explanatory note says, with the remuneration by way of fee of those providing general dental services at health centres, making changes in the dental estimate form, and the question of dental assistants.
I start with a very small drafting point and I apologise at once to the Minister because I have not had an opportunity of doing what I normally regard as the usual courtesy of informing his office that I would raise this very detailed point. I make quite clear that I do not expect an immediate answer across the Floor of the House on this point. I raise it because I think it conceivable that it may be of assistance to him. I have a feeling that inadvertently he has amended rather more than he meant to do. That is rather a bold statement for any layman like myself to make, but it seems that that is what has happened.
If he looks at the parent Regulation 3 of 1964, he will see that this is amended by the Statutory Instrument before us by Article 2(2). I anticipate that the Minister intends that after the passing of this Statutory Instrument parent Regulation 3 is to open with the words:
The arrangements which a council are required by Section 40 of the Act to make with practitioners for the general dental service shall incorporate …
and then paragraphs (a) and (b). The form of words in the Statutory Instrument before us could at least have been


strongly argued to have taken out the introductory words. The words used in the Statutory Instrument before us are to the effect that there shall be a substitution for "sub paragraphs 1(a) and (b)", and I think that there is a strong presumption that the Minister has thereby inadvertently taken out the introductory words.
As I say, this is a highly detailed matter and I have not observed what I regard as the usual courtesy of notice to his office on it. I do not, therefore, ask for a reply now, but I should be grateful if the right hon. Gentleman would be kind enough to write to me to put my mind at rest.
My second point is one of complaint. This Statutory Instrument deals with three important and highly practical matters. For instance, the dental estimate form is one of the principal contacts which the dentist has with the Service as a whole. It has been most helpful up to now to have by far the greater part of the form incorporated in the 1964 Regulation. There has been only one amendment since, in 1965, dealing with the scale of remuneration, which was comparatively simple and easy to follow. Now, however, if the House approves this Instrument, the ordinary dentist and those who advise him will have to go through a great deal of cross-reference from one Instrument to the other.
I appreciate that any Minister is not always his own master in matters of this sort, but I make the plea—I have made it often before to other Ministers—that the Minister and those who advise him so competently should bear in mind the problems of the ordinary practitioner. It would be helpful now if we could have a consolidated set of Regulations so that the ordinary person could find out exactly what it all meant.
My next general point relates to assistants. This arises from page 19 of the parent Regulations, Regulation 12(3), which is amended by the Instrument now before us. The main change covers the situation where a dentist is operating in more than one area, and, in making the change, the right hon. Gentleman has slipped in two significant words. I think I know what the intention is, but this is a matter of importance to the general

practitioner and it would be helpful if the Minister made his intention explicit. He is now providing that a practitioner
shall not employ more than two assistants in all"—
the words "in all" are new—and he then goes on to provide for certain consents, and consents by more than one council.
I assume that what has been happening is that alert practitioners have appreciated that, if they are practising in an area covered by more than one council area, they are not clearly precluded by the Regulations as they stand at present from employing more than two assistants. In other words, they have done it—to put it in this way—on the strength of there being more than one council. It would be helpful if the Minister would make the point clear. Otherwise, the inclusion of the words "in all" becomes a little ominous.
We are always watchful for simple words inserted in legislation or Statutory Instruments. One constantly gets badly caught otherwise.

Mr. F. A. Burden: Hear, hear.

Mr. van Straubenzee: I am grateful for my hon. Friend's support. It behoves us all to keep a watchful eye on these matters, and it is a good thing if those who advise on drafting know that we shall be doing so.
I come now to the dental estimate form again. In the parent Regulations this is dealt with on page 16, and the Regulation now to be amended is Regulation 7(1,d). At first blush, the new provision seems rather curious. The Minister has used terms which largely follow what went before, but the practitioner is now to be allowed to sign his name to the form in his own handwriting, with his name and initials—which is what one would expect—but there then comes the new provision,
except where the Board allow him to use a shorter signature".
We should all be glad to know why.
I have an interest in this question because, although I am not a dentist—mercifully, there are some fates worse than death which one escapes, and I think that that would be one—I have what is


probably one of the longest names in the House. If I were a dentist and subject to this Regulation, I should assume that I was required to sign my full and rather long name—which is not one I made up myself—whereas, under the new Regulation, the board will, apparently, be entitled to allow me to use a shorter signature. I am puzzled by this. What situation has the Minister in mind in which a dentist would be allowed by the board to sign in a shorter form? Would I be allowed to sign simply as "van"? In ordinary life, there are many times when I long to be able to shorten my name.
This is a serious point. I can understand that there are practitioners, though probably not so many in the dental service, who help us immensely in this country but whose countries of origin are other than our own and who may well have very long names. The board may be happier in such cases to have a shorter signature. In the second place, I fully realise that the Minister does not wish to impose on the already heavily pressed dental profession more administration and form filling than he absolutely must. I should be glad to have an assurance that what is here provided w ill not be misused in some way.
In the fairly recent past, some dentists who have got absolutely fed up with the amount of administration in which they think they are involved have, as a matter of protest, signed their forms with a cross. I assume that the board had no intention to authorise that as a shorter signature. Will the Minister please tell us why he has put this provision in?
I have no other comments upon the dental estimate form save the one which I made earlier in my speech, that the unfortunate dentist trying to find his way through the provisions of the form will now have the fearful job of weaving between two separate Statutory Instruments.
My last point concerns what is, perhaps, the most important provision of all here—I warmly welcome it—namely, the amendments providing that general dental services at a health centre may be remunerated by fees as an alternative to salary. I have a particular interest in this because it is in areas such as designated new towns that health centres

fill a most important rôle and, therefore, anything which assists in the provision of these services is to be welcomed. In my view, the powers which the Minister is now taking will assist to this end, but I should be glad to know what reason prompted the right hon. Gentleman to take them.
Was it pressure from the profession, or was it that the Board was finding difficulty in obtaining sufficient practitioners on the old basis? Is it that the Minister felt that it was wise to move to a system of fees rather than a salary basis? Has he perhaps come up against opposition from the profession? It would be very useful to know how the Minister's mind is working. As a consequence of the Regulations, does he expect a fairly substantial change-over from a salary to a fee basis? Those are matters we should be grateful to have fully explained, but I repeat that in principle and in general I very much favour the way in which the Minister's mind is clearly moving.
Only last week I paid a visit to my own charming, able and efficient dentist, and I commented to him that whereas everyone was glad to see his doctor almost everyone is reluctant to see his dentist. I should think that the dentist's must be one of the most unrewarding professions in terms of human relationships, but the dentist plays a vital part in our health services. The Statutory Instrument deals with three detailed but important aspects of their work. Although I am aware that the Minister's Parliamentary jaw is rather sore from the extractions of last week's local government elections, I hope that he will give an explanation.

11.41 a.m.

The Minister of Health (Mr. Kenneth Robinson): I shall not deal with the final observation of the hon. Member for Wokingham (Mr. van Straubenzee), but I must tell him, in reply to his penultimate observation, that there is plenty of evidence that the reluctance to visit one's dentist is getting less and less as time passes, particularly among children. I visited a training establishment for dental ancillaries not very long ago in which there was a whole battery of dental surgeries dealing with children. I was there some time and I did not hear an exclamation of pain throughout my visit. All the children seemed perfectly happy,


whether they were awaiting treatment or undergoing it.
The Regulations are the sixth set of Amendments to the consolidated General Dental Service Regulations, 1964. The hon. Gentleman made a fair point about consolidation. We are preparing a further consolidation which I hope will be laid before Parliament towards the end of June. There is a reason for the delay; the Dental Rates Study Group is considering recommendations on the scale of fees necessary to give effect to the revised target net income for 1967–68.
The hon. Gentleman very fairly said that he did not expect a reply this morning on the drafting point which he raised and which I should like to discuss with my legal advisers. As a layman, I never like to give interpretations of Parliamentary draftmanship, but I shall certainly write to the hon. Gentleman on the point.
The principal Amendment in the present set of Regulations is that which permits those dentists who are willing to provide general dental services at health centres to choose, with the agreement of the executive council concerned, whether to be paid by salary, as at present, or, if they prefer, by fee in the same way as dentists practising from their own surgeries.
Until these Amendment Regulations were introduced, dentists who wished to provide general dental services from a health centre could do so on a salaried basis only. For some years the profession have argued that this method of remuneration deterred dentists from taking up health centre practice; evidence suggests that this is probably the case, since at present there are only about seven dentists in England and Wales providing general dental services from health centres.
The growing interest of the medical profession in the development of health centres, which is illustrated by a very substantial increase in the number of health centres planned by local authorities over the next 10 years, and particularly the next five years, emphasised the need to remove, wherever possible, any disincentive to dentists providing general dental services from health centres. As the National Health Service

Acts do not debar the Minister from making arrangements for dentists in health centres to be remunerated in the same way as dentists practising outside, I decided to amend the Regulations in the hope of encouraging more dentists to consider practising from health centres. The hon. Gentleman asked where the initiative came from, and I assure him that it was mine.
As it is not entirely clear whether my powers under the National Health Act enable me to permit dentists in health centres to accept private patients, I am advising executive councils that for the time being they should not enter into any arrangements for the provision of general dental services at health centres that will enable dentists to treat patients privately, though they will be able to provide more expensive treatment than is clinically necessary where a patient is willing to pay the difference in cost.
In a circular to local health authorities on health centres which I hope to issue shortly I shall make it clear that dentists in health centres who choose to be paid by fee will be free to agree in consultation with the Executive Council and local dental committee the extent to which equipment, materials and services shall be provided by the local authority on a repayment basis. Thus if a dentist prefers to install his own dental chair, employ his own nurse and technician or use a commercial laboratory of his own choosing he will be free to do so. On the other hand, should he prefer the local authority to provide all equipment, services, staff and laboratory facilities it may do so. He will, of course, be required to pay the full economic cost of any services provided. This is because the scale of fees incorporated in the General Dental Service Regulations are designed to yield not only the target average net income recommended by the Review Body but practice expenses as well.
The development which this Regulation makes possible is, I believe, very attractive for the younger dentist, for he will be able in the years when dentists' earnings tend to be at their highest to build up a substantial practice without having to worry about servicing and repaying bank or other loans. I understand from my recent discussions with the British Dental Association that some young entrants to the profession are reluctant


to incur the heavy capital commitments needed to set up a practice on their own account. At the same time, the dentist who comes into the health centre will benefit from contact and exchange of views with his medical, pharmaceutical and nursing colleagues who will be working in the same building.
I appreciate that the profession is disturbed at the present embargo on private practice from health centres and believes that because of it few dentists will be willing even now to come into health centres. I hope that their fears will prove to be unfounded. Nevertheless, my mind is not closed to the possibility of permitting some private practice, but as amending legislation will be necessary before present arrangements can be modified to allow this I want to consider the whole question very carefully.
I have to bear in mind that in some parts of the country there are dentists, albeit a small proportion of those working in the general dental services, who are unwilling to provide the full range of treatments that should be available under the service. Clearly I could not accept such a situation in health centres that are financed by public funds primarily for the provision of National Health Services. A situation in which a health centre dentist refused to provide a set of dentures for a National Health Service patient who needed them could not be tolerated. It seems essential to me, therefore, that those who come into health centres must be prepared to offer the full range of treatment available under the National Health Service that is needed by the patients they accept and that they themselves are competent to provide.
There is nothing in the new arrangements to prevent a dental partnership, or a single-handed dentist for that matter, from coming to an arrangement with an executive council to provide general dental services at a health centre on a part-time basis while still retaining surgery premises elsewhere. Nor is there arty reason why a dentist in a health centre should not, with the consent of the executive council, bring in a partner or enter a separate part-time contract with the local health or education authority to provide treatment under the priority or school dental services at the health centre.
It is my aim that the new arrangements shall be as flexible as possible and shall insure that the facilities at health centres are used as much as possible for the maximum number of N.H.S. patients. At the same time, I would only encourage health authorities to provide accommodation for dentists in health centres in places where there is a demand for such facilities.
That is the main amendment in the Regulations. There are others, primarily designed to tidy up and clarify certain points of doubt. As the hon. Member said, there are some slight changes in the dental estimate form and the way in which it must be filled in by dentists.
As to his question about a shorter signature, I am told that the Board has to be certain that the signature is that of the practitioner and not a simple mark or initial which could readily be imitated by an employee of the dentist or some other person. The Board must be satisfied that the shorter signature can be allowed without carrying such a risk. I imagine that, if a dentist had a signature as long as the hon. Gentleman's or longer, he could arrange with the Dental Estimates Board to sign something else.
Opportunity has been taken to resolve doubts where executive councils have power to hear a complaint from a patient that a dentist has charged him for failing to keep an appointment without good reason. In future, executive councils will not deal with such complaints, which are essentially matters for the civil courts to determine.
For some years, with the profession's agreement, the number of assistants employed by a dentist providing general dental services has been limited to two. The hon. Gentleman is right to say that the Regulations did not make it clear beyond doubt that this was the maximum for each principal, irrespective of the number of executive council areas in which he practised. We have corrected any misapprehension on this point. It is not a change in practice but merely a clarification.
I have also amended the Regulations to bring them into line with the recent amendment of the General Medical Service Regulations, which provide for executive councils rather than dentists


to pay general medical practitioners a fee for the arrest of haemorrhage.
At the request of the profession, the term "occasional treatment" has been substituted for "emergency treatment" as a description of certain treatment that may be done by a dentist without the prior approval of the Dental Estimates Board. I have also amended the conditions governing the use of materials to require that acrylic teeth supplied in the general dental services shall conform to a recently published British Standard. In the light of these explanations, I hope that the hon. Gentleman will feel able to ask leave to withdraw the Motion.

11.54 a.m.

Mr. van Straubenzee: I am grateful for the Minister's painstaking explanations. My only reservation is that we shall want to look more closely at the admittedly thorny question of the treatment of private patients at health centres. I was interested to hear the right hon. Gentleman say that his mind is not closed to an extension here. As the matter is under examination, it is clearly not appropriate now to go into it further. In the light of his explanations, therefore, I ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

RAILWAYS (HIGHAM TUNNEL)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]

11.55 a.m.

Mr. F. A. Burden: I wish to raise the matter of conditions in Higham Tunnel, which has been causing considerable concern to many people using the South-Eastern Region of British Rail. It has not only affected their convenience on several occasions but might well affect their safety.
On 28th November last, a Gillingham to Chatham train ran into a heap of chalk which had fallen on to the line in Higham Tunnel. I understand—this has not been denied by British Rail—that this was one of at least four major falls of chalk in the last 10 or 12 years. Both the track and the train suffered minor damage,

and the train was delayed for about three hours. A British Rail spokesman later said, "This tunnel is safe."
But, as a result of the incident, newspapers in the Medway Towns and other Kent towns expressed grave concern for the safety of trains using the tunnel, as did many people who travel on the line. I have representations from many people in my constituency. Railmen questioned about the tunnel are alleged to have said that, unless improvements are made, there will be a major disaster.
Even if we assume to be correct, the view of the railway spokesman that the tunnel is safe, it cannot be denied that travellers on this and other trains suffered gross inconvenience as the result of the fall of chalk. The train was delayed for about three hours. British Railways have said nothing to suggest that there will be no such delays in future. Surely they cannot just sit back and adopt the attitude of "So what? Let us wait and see what happens."
Is there only a threat of delay to passengers, or is there a threat to their safety? I submit that there is a grave and real danger, which is why I have pressed for this debate. On 23rd December last, I wrote to the Minister of Transport:
I think I should bring to your attention the condition of the Higham railway tunnel on the South Eastern region of British Railways.
About two weeks ago I gather there was a fall at the tunnel and as a result a considerable disruption of traffic.
Since then, a statement has been made that it is now 'completely safe', but at the same time it is understood that a 24-hour watch is being kept in case of any falls of rubble. This, say British Rail, is because of 'the nature of its construction.' A very old tunnel, it is, apparently, 'less supported' than modern tunnels.
All of which, I think you will agree, implies an inherent danger. I cannot see how if the tunnel is really safe it is necessary to keep a 24-hour watch. What a waste of manpower! If it is safe surely there is no need for such a watch, and if it is unsafe something should be done about it before there is a serious accident. I should be grateful if you will look into the matter.
On 8th February, the Joint Parliamentary Secretary, whom I am grateful to see on the Government Front Bench to reply, wrote to me:
As promised by my Private Secretary on 9th January"—


I was grateful to the hon. Gentleman for having let me know that the delay was due to investigations which were going on—
I am now able to reply to your letter of 23rd December about Higham Tunnel on the South Eastern Region of British Railways.
I have now received a report from the British Railways Board about the recent accident in the tunnel and its condition.
On 28th November, at approximately 4.38 p m., a train from Gillingham to Charing Cross ran into a heap of chalk which had fallen from the roof of the tunnel. The chalk was removed and the line reopened to traffic at 7.10 p.m. No one was hurt and only minor damage was done to the train and track.
The Board say that this tunnel was constructed about 150 years ago for the Gravesend-Strood canal but it was taken over for railway purposes in the 1850s. Parts of the tunnel are unlined and in these places the chalk is exposed to the atmosphere. Because of these circumstances, it has been the practice since before the memory of the present engineering staff to carry out a 24-hour patrol. This is in addition to the annual inspections and special inspections which are made when there are any signs of deterioration in the chalk surface.
Proposals for erecting protective works in the more vulnerable parts of the tunnel are being considered by the railway officials but the costs ale likely to be very high.
The Minister went on to say—and this is an extremely significant paragraph:
Perhaps I should add that 24-hour patrols are carried out in places where rock falls"—
I repeat that, "where rock falls"—
might constitute a hazard, even though these occurrences are fairly infrequent. Our officials are satisfied that the Board are taking all reasonable precautions to ensure the safety of traffic on this line.
Let us consider the Minister's letter. It makes it clear that there is danger not only of further falls of chalk, but of falls of rock, in unlined parts of the tunnel and that because of this danger it is the established practice to carry out annual investigations of the tunnel—I should certainly hope that every tunnel on British Railways is examined at least once a year, whatever its condition and however new it might be—and, in addition, a 24-hour patrol is maintained at Higham tunnel. That action alone is surely the real measure of the danger of falls and the necessity to maintain a round-the-clock patrol.
The incident of 28th November clearly emphasises and highlights, as the Minister must agree, that the existing arrangements are completely inadequate, because, whatever other precautions might be taken, the patrol procedure failed com-

pletely to prevent the train from running into a heap of chalk of considerable size which brought it to a standstill at 4.38 in the afternoon.
It is indeed fortunate that on that occasion there was no loss of life or injury to passengers and that neither train nor track suffered much damage; but this was not due to any precautions taken by British Rail, because the train actually ran into the pile of chalk despite the precautions. Presumably, there was no great accident because the chalk was soft and the train either ploughed through it or brushed it aside. But what if it had been a fall of rock, which the Minister in his letter to me says is a danger? The result then might have been not merely a three-hour delay, but death or injury for many people.
In the circumstances, it was not surprising that I again wrote to the Minister on 13th February, when I said:
Thank you for your letter of 8th February about the safety of Higham Tunnel. I am sure that a little reflection will convince you of the complete inadequacy of your reply.
Those are rather strong words but I felt them to be justified. In view of the fact that the precautions did not stop the train running into the pile of chalk, perhaps the Minister will today recast his thoughts about the matter.
I went on to say:
It is perfectly clear that if the '24-hour patrol' of the tunnel is to have any real value, it must ensure that the whole length of the tunnel is kept permanently under observation. This is because it is clear that a fall of chalk could take place at any time and without warning.
You have stated in your letter that proposals for erecting protective works in the more vulnerable parts of the tunnel are being considered but the cost would be very high. This may be so, but so, too, must it be very costly to maintain a constant 24-hour watch on the tunnel. Above all, the safety of the travellers on the South-Eastern line of British Railways must be the first consideration. Your letter makes it perfectly clear that the tunnel at present constitutes a hazard, and I trust you will look at the position from that point of view.
The Minister replied to that letter in his usual courteous if rather frank terms. He disagreed with some of the points I had made, no doubt on the advice of British Rail. He replied on 28th February, when he said:
Thank you for your letter of 13th February … My letter of 8th February was


written after due consideration of all the relevant factors and I could not agree that it was completely inadequate.
He went on to say:
There is a hazard here, as there is at many other places on the railway. The Chief Inspecting Officer of Railways, Colonel McMullen, has at my request considered the case carefully. He tells me that the only way of eliminating chalk falls entirely in the unlined part of the tunnel, which is less than half its full length, would be to line it throughout. This would, however, be an extremely costly business and he does not consider that the expense, which might approach £½ million, would be justified.
When one considers that Government expenditure is going up this year by over £600 million, £½ million is not a great deal to ensure the safety of a train in a tunnel which is suspect.
The Minister went on to say:
He considers that the Board are taking all reasonable steps, by inspection, to anticipate chalk falls and, by regular patrolling, to ensure that if a fall does occur, it does not endanger trains. We are, therefore, satisfied that the hazard is an acceptable one.
Must I go all through the analysis again? Must I point out that the patrols did not anticipate the fall in question, that despite the patrol the train actually collided with the chalk which had fallen on to the line, that it was delayed for about three hours and that there was minor damage—thank God that it was only minor damage—to the train and to the track?
We are, therefore, satisfied that the hazard is an acceptable one",
says the Minister. I very much doubt whether the hazard is acceptable.
My final letter on the subject went to the Minister on 20th March. I am sure that the fact that he has not replied was due to our having this debate today. He will, no doubt, deal with my letter in general context and, perhaps, particularise on some of the points I made.
This is a very busy tunnel. I am informed that about 160 passenger and goods trains pass through Higham Tunnel during every 24 hours. Trains passing through the tunnel during the rush-hour periods in the morning and evening can carry as many as 1,000 passengers. The danger to such a train is the ultimate extent of what is described by British Railways and the hon. Gentleman as an "acceptable hazard." Quite apart from

the main incident to which I have referred and the other major falls of chalk, British Railways' spokesmen have admitted that patrolmen are constantly clearing minor falls along the track.
I understand that there is only one patrol man on duty at any time. I do not intend any reflection on those patrolmen, but it may be that, on the occasion which has given rise to this debate, the man on duty was off having a cup of tea or was away for a moment when the fall occurred. That could happen if there is only one man on duty at any time. In any case, he could be two miles away from a fall, but, even if he was near the spot at the time, according to railwaymen, he has only about three minutes to raise the alarm, and it is obvious that no adequate alarm was raised on 28th November.
Railwaymen on the job feel that a part solution would be to install floodlights, so that motormen do not have to drive blind through the tunnel. Undoubtedly that would be an improvement on the present arrangements. They also suggest that klaxon horns could be installed on trains so that warning could be given to signalmen if a fall was struck, although it might be too late for that train and the passengers. The value of a klaxon would be difficult to determine if the train had ploughed into a pile of rubble and there was great damage, injury and perhaps loss of life. Railwaymen using the tunnel have suggested that corrugated sheets could be laid inside the walls and reinforced with concrete. I gather that that was done at Sevenoaks Tunnel some years ago.
If there is a crash in this tunnel, it does not need very much imagination to get a view of the chaos which could be created and the difficulty which would arise in treating and removing the injured and, in extreme cases, the dead. Do British Railways dare to say that that is not a possibility, in view of the fact that, despite all their present arrangements and precautions, on 28th November last a train actually ran into a major fall of chalk in the tunnel?
Early last February, a British Railways spokesman said that engineers are actively aware of the present conditions, which are being closely watched. He declared that the safety aspect is fully covered. That is just not true. He went on to say that


patrolmen, are carrying out a 24-hour watch, and so they were in November of last year. But what guarantee is there? Nothing else can be accepted than a complete guarantee from British Railways that no such incident will occur in future and that the precautions that they take will be such that there cannot be a recurrence of an incident similar to that which took place on 28th November.
In view of the very grave concern which exists and in the interests of rail travellers, British Railways and the hon. Gentleman's Ministry, I hope that he will agree this morning to appoint a highly-qualified and completely independent engineer to examine and report on the position with the utmost speed. I hope also that he will give an undertaking that any proposals for improving the safety of the tunnel which he might suggest will be put in hand without delay, even if the cost is £500,000. Better still, perhaps he will give an undertaking that British Railways will at once proceed to carry out any action which may be necessary to remove the hazard which exists at the moment to all trains using the tunnel. I should be happy to accept that even in preference to asking a highly-qualified independent engineer to examine the position.
It may be that the hon. Gentleman thinks that I should have examined the tunnel, as did the hon. Member for Rochester and Chatham (Mrs. Anne Kerr). In the circumstances, if time permits, I hope that the hon. Lady will be able to say a word about this. The hon. Gentleman may consider that I should have looked myself, but I hope that the hon. Lady will forgive me if I say that I set my face firmly against that, because I could see no great value in examining Higham Tunnel with a lamp. I am not a highly-qualified engineer, and I could not give a qualified opinion of the conditions in that tunnel. I felt that it was far better to raise the matter on the Adjournment, produce the facts, and let the highly-qualified people get down to discussion and action to put matters right.
I believe that the facts speak sufficiently clearly, because neither I nor any other unqualified person could discount the mass of evidence which emphasises the danger which has caused me to raise the matter this morning.
May I make this observation? Cars have to be examined every three years to ensure that they are roadworthy. The Minister of Transport quite properly has now laid down that every car manufacturer shall install safety belts on all new cars. These are quite proper regulations to improve the safety of passengers and others. Then there are the most elaborate and exacting regulations to ensure that aircraft are safe. However, a train crash can involve many more people than are likely to be carried by other means of transport, and I submit that the same standards of safety must be enforced on our railways. Where there is a hazard such as exists in Higham Tunnel which can be removed even at the cost of £500,000, it is far better that it should be done than that there should be any danger to trains running through that tunnel.

12.20 p.m.

Mrs. Anne Kerr: I asked the hon. Member for Gillingham (Mr. Burden) whether he would be able to give me time to take part in this debate. He felt that he would not, with the result that I have not the full notes which I would have liked in order to put before the House my view of this rather worrying situation.
I was told that there was a hazard in the Higham Tunnel, and that it was an acceptable one. Like the hon. Gentleman, I was worried about this, and I asked for permission to see the situation for myself. I thought that if, accompanied by senior officials of British Railways, I saw the tunnel I would get a clearer idea of just what the danger was to the thousands of people who use this line every day. As a result of my visit, I was a little happier in my mind, but not altogether content.
One of the things which struck me was that the patrolman whom I met on my strange night journey through the tunnel was the man who had been on duty on the night that the chalk fell; I think that it was on 25th November last. He told me that he did not think his job dealt adequately with the problem, if there was one. The correspondence which I have since had with British Railways has to some extent quietened my fears on this problem, but not altogether, and I support the hon. Gentleman's claim that there


should either be an independent inquiry into this tunnel, or that British Railways should give an assurance that there is no danger of any more major falls of chalk.

Mr. Burden: I am grateful to the hon. Lady for giving way, because there is an important point to remember here, and I would like to know whether she agrees with me. Is it not the fact that despite all the precautions which were in evidence, and which were taken, on 28th November the train to which I have referred struck a major fall of chalk, proving that the precautions were not adequate to prevent this occurrence?

Mrs. Kerr: That is true, and the patrolman whom I met had passed the point of a fall of chalk 10 minutes before it occurred. Obviously, the patrol of itself is not adequate to spot likely falls of chalk.
There was a danger of a derailment, although this is something about which the engineers know far more than I do. They say that the rail which was displaced could not have been displaced if the train was on it; that it was the electric conductor rail which was displaced. I find this disturbing, and so do the people who use this line. They remember the Lewisham train disaster, and wonder whether a similar tragedy might occur in this tunnel. I therefore ask my hon. Friend to examine this closely and to give the assurance for which both the hon. Gentleman and I ask.

12.24 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. John Morris): I am grateful for the opportunity to reply to this debate, and I hope that what I say this morning will remove the anxieties of the hon. Member for Gillingham (Mr. Burden). During the last few months I have been under attack on two fronts—by the hon. Gentleman, and by my hon. Friend the Member for Rochester and Chatham (Mrs. Anne Kerr). They have been most assiduous in pursuing what they regard as the interests of their constituents. I make no complaint about it, because this is an important matter, but Higham Tunnel has taken up a great deal of Ministerial time during the last few months. What I say today can, therefore, be regarded as a considered statement, made after a great deal of thought.

Mr. Burden: This tunnel does not affect only my constituents. It affects a considerable number of people who travel through it every day. About 160 trains a day, including freight trains, use this stretch of line. The passengers are not all Gillingham or Chatham people.

Mr. Morris: I thought that I was paying both hon. Members a compliment for the assiduous way in which they had pursued what they regarded as the interests of their constituents and others. I know that my hon. Friend has been to the tunnel to investigate the situation for herself. She has also been to see me, and has written to me, as has the hon. Gentleman.
I want to say quite clearly where responsibility lies. I think it important that we should understand the Minister's responsibility, and the Board's responsibility. It may be that the hon. Friend will not agree with what I say, but nothing could be worse than to cloud the responsibilities of the Minister responsible for transport and those of the head of a publicly-owned industry whose responsibilities are laid down in a Statute.
As the hon. Gentleman said, the tunnel was constructed during the early part of the last century, and rail traffic began to use it in 1845. It is 1,531 yards long, and ends in an open lay-by about 200 yards long which separates it from the Strood tunnel. About half the tunnel is lined, the remainder is virgin rock chalk. I emphasise this because I am advised—and the hon. Gentleman referred to the difference between chalk and rock—that in geological terms chalk is a form of rock, and there is no valid distinction between the two. This accounts for my letter to the hon. Gentleman being drafted in the way it was.
The tunnel lies in upper chalk, which is reinforced by layers of flint. The Geological Survey of Great Britain has been consulted, and informs us that when undisturbed upper chalk can be expected to stand well on its own, though lining may be required at certain places where faults, and so on, occur.
Scaling takes place fairly frequently. This is a skin about half an inch thick, over an area of 1 to 2 sq. ft., due to the delayed action of smoke fumes on the chalk. As steam traffic has been withdrawn, this, I am told, should cease


soon. Recently, some flaking occurred at the Higham end of the tunnel due to the effect of frost during an exceptionally cold period.
The hon. Gentleman referred to a figure of £500,000 as the cost of lining the tunnel. Apart from the cost, such an undertaking would cause severe dislocation to traffic for a considerable period. As the hon. Gentleman and my hon. Friend know, trains use this line for a greater part of the day and night. This is why it was possible for my hon. Friend to visit the tunnel only during the early hours of the morning. This was the only time at which permission could be obtained for her visit. If, in the interests of safety, the Board were minded to carry out an extensive lining operation, this could take place oily over a very substantial period because of the limitations in obtaining possession of the tunnel due to the large number of services which operate on this line.
British Railways are concerned with safety generally, and perhaps I might tell the House the safety measures which are applied at this tunnel. A patrol with a powerful light traverses the tunnel every two hours throughout the 24. In addition to the annual inspection, special inspections are made if any signs of deterioration are observed, and, if necessary, protective ribbing or lagging is erected. As an indication of the extent of the problem, perhaps I might point out that this has been done three times during the last 25 years.
I come now to the Board's statutory responsibility under the 1962 Transport Act, for which, presumably, the hon. Gentleman voted, but for which I did not. The Railways Board is responsible for the safety of operations under the Transport Act, 1962. I want to emphasise that so as to make it clear where the Minister's responsibility lies. The Minister has certain powers of inspection. Under Section 41 of the Road and Rail Traffic Act, 1933, she has power to inspect new work on passenger railways, but she has no power to inspect the maintenance of works.
The hon. Member referred to the question of ordering an inquiry. The Minister has discretionary power to order a formal inquiry into such accidents as the Board is obliged to report. This power is

usually exercised only in cases of accidents involving passenger fatalities, the indication of serious or repeated irregularities, of evidence of a pattern in the cause of accidents.

Mr. Burden: I am grateful to the Minister for giving way. This point raises a great issue. The 1962 Act is not sacrosanct, if it is found to have shortcomings. If there is a question of safety in respect of air travel the Minister can order aircraft to be grounded until they have been properly inspected and repairs or modifications have been carried out. The emphasis is on avoiding accidents.
In the case of the railways it seems unfortunate that the Minister has no power until after an accident has occurred. When such a case as this is brought to the notice of the Minister it is surely in the interests of everybody, including herself, that she should make representations to ensure that proper measures are carried out. I am sure that the hon. Member will agree that in the final issue the Minister of Transport would get a great deal of blame if anything happened in this case.

Mr. Morris: The hon. Member must be fair to my right hon. Friend. It is quite unfair of him to put the responsibility directly or indirectly upon her shoulders. I have tried to spell out her powers. I am sure that neither the hon. Member nor I wants to cloud the question of responsibility as between the Railways Board and the Minister.
We must be clear where my right hon. Friend stands. I have gone into this matter closely because of the representations made by my hon. Friend and the hon. Member, and I have tried to sort out the powers of the Minister. I have asked about the statutory position, and have discovered what it is. I have told the hon. Gentleman that responsibility for maintenance and for action in this matter lies with the Railways Board.
The incident was caused by a fall of about two tons of chalk in the latter part of November. The incident was reportable to the Minister because a passenger train came into contact with the obstruction. The train was not derailed, and there were no personal injuries. A formal inquiry was not ordered, and would have been quite inappropriate. Local inquiries were made, and it was considered that the


Board was taking all reasonable safety precautions.
This incident should be considered in perspective, and taken in the context of similar incidents on the railway system as a whole. It would be convenient to look at the picture of accidents and incidents throughout the railway system. Included in the category of accidents due to landslides, snow and floods, there were 29 in 1962, including two derailments; 17 in 1963, with nine derailments; seven in 1964, with one derailment; and 13 in 1965, and a derailment followed by a collision in which a driver and secondman were killed. That was the incident at Bridgend on 17th December, 1965. I am advised that derailments in tunnels are not so potentially dangerous to passengers as are derailments in open country.
As regards the issue on which the hon. Member has taken me up, the tunnel may be considered a hazard, but it is considered by British Railways as an acceptable one.

Mr. Burden: I am sorry to keep interrupting the Minister. I hope that he will forgive me, but I feel very strongly about this. He has produced a mass of evidence about accidents that have taken place elsewhere, and has mentioned landslides, and so on. In most cases those incidents could not have been foreseen. But there is a constant hazard in this tunnel. That is the point. It has been admitted that in this length of 2 miles there is a known hazard. That is what I want to put right.

Mr. Morris: The hon. Member feels strongly about this. I am explaining to him, slowly and painfully, where the responsibility lies. He should make representations to the Railways Board if he is not satisfied with what I am telling him.
I wanted to explain to the hon. Member what I meant by the word "hazard". There are many hazards on the railways, as there are in any form of travel, or in every form of everyday life. Whenever one drives a car or even crosses the road a certain hazard is involved. One can never give a 100 per cent. guarantee. The tunnel is no more of a hazard than the illustrations I have given.

Mrs. Anne Kerr: In that case, why is there this constant 24 hour patrol in the tunnel? It has been going on for many years. I do not believe that the Board knows for how many years it has gone on, but it is still going on. Why?

Mr. Morris: This question comes directly within the responsibility of British Railways. Questions of the maintenance of the railways system are entirely within their court. If they decide to have a patrol in a tunnel, or in open country, it is a matter for them and not for the Minister.
It would be quite incompatible with the responsibility of my right hon. Friend if she were to be called upon to cause inquiries to be made in the case of the thousands of people whom British Railways place at various points in their system, in the interests of safety. We need only to consider the amount of shunting that goes on to realise the number of safety precautions that British Railways take. The Minister's powers are spelt out under the terms of the Act.
It has been suggested by the hon. Member that an independent expert should examine the tunnel. I have told him what the Minister's responsibility is about an inquiry. British Railways are responsible for their own experts, and they are no mean experts. The tunnel has been examined by the Chief Civil Engineer, Southern Region. He is an expert, and he is satisfied. I stress that responsibility for safety lies fairly and squarely on the shoulders of British Railways, who are fully conscious of their obligations.

Mr. William Molloy: I admit that I have not been able to hear the whole debate. I can understand my hon. Friend's argument about responsibility, but surely he could not deny that what we are talking about is the possibility of something disastrous happening. Does he believe that if such a thing should happen the Minister would have the nerve to tell Parliament that it was nothing to do with her? That is what we have to consider.
I would have thought that when Members of Parliament raised such matters as this at least my hon. Friend or his right hon. Friend should be able to say,


"While this is the responsibility of British Railways, I must draw their attention to the fact that the possibility of an accident is felt to exist."

Mr. Morris: I can immediately accede to my hon. Friend's request. One of the first things I did when I had a request from my hon. Friend the Member for Rochester and Chatham was to ask British Railways what its arrangements were. I discovered exactly what she wanted to find out. The Chief Civil Engineer is the expert in this field; I am not, any more than the hon. Gentleman or my hon. Friend was when she visited the tunnel. If I went there, I should be no wiser. I asked the railway

experts directly responsible what the situation is.
British Railways told me that the Chief Civil Engineer had visited the tunnel. To be doubly certain, I then asked our own expert who has been referred to in correspondence, Colonel McMullen, the Chief Inspecting Officer of Railways. On the basis of his advice, despite the concern on both sides of the House, I come to the House, having asked the experts, to tell hon. Members that they are quite satisfied with the state of affairs in the tunnel.
The debate having been concluded, Mr. DEPUTY SPEAKER suspended the Sitting till half-past Two o'clock, pursuant to Order.

Sitting resumed at 2.30 p.m.

DEATH OF A MEMBER

Mr. Speaker: I regret to have to inform the House of the death of Edward Charles Redhead, esquire, Member for Walthamstow, West, and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.

Oral Answers to Questions — EUROPEAN ECONOMIC COMMUNITY

Mr. St. John-Stevas: asked the Secretary of State for Foreign Affairs whether he will make a further statement of British policy towards the European Economic Community.

The Secretary of State for Foreign Affairs (Mr. George Brown): I have nothing to add to the reply given to the hon. Gentleman by my right hon. Friend the Prime Minister on 11th April.—[Col. 967, Vol. 744.]

Mr. St. John-Stevas: Can the Foreign Secretary confirm the newspaper report that the British application is to be lodged in the week of 7th May, and that it will be an application and not a declaration of intent?

Mr. Brown: Sad to say these days, one can hardly ever confirm anything one sees in the newspapers; but, of course, even if I could I would not confirm this report.

Mr. David Watkins: asked the Secretary of State for Foreign Affairs what recent representations he has received from the Austrian Government about British entry into the Common Market.

The Minister of State for Foreign Affairs (Mr. Frederick Mulley): None, Sir.

Mr. Watkins: I thank my right hon. Friend for that straight answer to a straight question. Does he expect any representations from the Austrian Government concerning the effects on their

economy of any possible British membership of the European Economic Community, bearing in mind our mutual membership of E.F.T.A.?

Mr. Mulley: The Austrian Government made it clear last December that they joined in the welcome accorded by other E.F.T.A. Governments to Her Majesty's Government's initiative in starting talks with the six countries. Austria, as a member of E.F.T.A., will, of course, participate in any future consultations we have, but I cannot anticipate what decision Her Majesty's Government will in fact take.

Mr. Dewar: asked the Secretary of State for Foreign Affairs whether he intends to have further discussions with President de Gaulle before a decision is made to apply for membership of the European Economic Community.

Mr. George Brown: There are no plans for any further round of discussions with Heads of Government of the Member countries of the European Economic Community.

Mr. Dewar: Since there are no intentions to hold more such talks, are the Government satisfied that there is no possibility of France raising objections in principle at least to Britain negotiating for entry to the E.E.C.?

Mr. Brown: I cannot answer for France. I recently made my views clear at a private meeting to which a good deal of public attention was given.

Mr. A. Royle: In view of the right hon. Gentleman's reply about France, can he tell us whether it is the Government's intention now formally to apply for membership?

Mr. Brown: If the hon. Gentleman had been in the House earlier when I answered Question No. 1, he would have heard me say that I have nothing to add at present.

Mr. Shinwell: Has not my right hon. Friend had enough of the old gentleman? Why does he not leave him alone?

Mr. Brown: I am not clear which old gentleman my right hon. Friend the Member for Easington (Mr. Shinwell) is referring to.

Dr. Ernest A. Davies: asked the Secretary of State for Foreign Affairs what further consultations he has in mind to hold with European Free Trade Association countries before decisions are made about an application to join the European Economic Community.

Mr. George Brown: At the meeting of the European Free Trade Association (E.F.T.A.) Council in Stockholm at the beginning of March, it was agreed that there would be further talks after Her Majesty s Government had reviewed their own discussions in the capitals of the Community and before any final conclusions were drawn from them.

Dr. Davies: When considering whether to go forward with an application, would my right hon. Friend consider whether it would be profitable for some kind of joint application to be made with our E.F.T.A. partners?

Mr. Brown: I think that our E.F.T.A. partners—this certainly applies to us, and I believe that it applies to all of them—would much prefer to keep in close contact with each other, but that we should each be responsible for our own national actions.

Sir Knox Cunningham: Is it the policy of Her Majesty's Government that all the E.F.T.A. members must join, or do we "go it alone"?

Mr. Brown: I repeat that the decision taken at the London meeting of the Heads of E.F.T.A. Governments a few months ago was that we should keep in the closest contact and consultation with each other—this was reaffirmed at Stockholm—but that each country thereafter would be responsible for what it wanted to do.

Oral Answers to Questions — VIETNAM

Mr. St. John-Stevas: asked the Secretary of State for Foreign Affairs whether he will take a further initiative to bring an end to the war in Vietnam.

Mr. Dickens: asked the Secretary of State for Foreign Affairs if he will now take a further initiative to end the war in Vietnam.

Mr. George Brown: I have nothing to add to what my right hon. Friend the

Prime Minister told the House on 23rd March.

Mr. St. John-Stevas: It is not my day, Mr. Speaker. Can the right hon. Gentleman say whether he agrees with the suggestion made by Mr. Kosygin that the Geneva Conference is, perhaps, too unwieldy a body to negotiate a separate peace and that it would be better to set up an ad hoc body of smaller character, including France and China?

Mr. Brown: There are a variety of ways, as I have said to the House quite a number of times before, in which we might get the exercise to end this war started, and the number of ways in which we might reach a conference table and final solution of the problems at the Geneva Conference could easily at some stage form part of the machinery, but at what stage is a different question.

Mr. Sydney Silverman: Is my right hon. Friend yet ready to accept the view that there is no hope whatever of bringing North Vietnam, or any other country, into a conference discussion while it is being bombed?

Mr. Brown: I think there is a Question on that subject later.

Mr. Judd: asked the Secretary of State for Foreign Affairs under what conditions the British Government will now support the cessation of bombing by the United States of North Vietnam as one of the three points of the peace initiative for Vietnam proposed by U Thant, Secretary-General of the United Nations.

Mr. Barnes: asked the Secretary of State for Foreign Affairs whether he has made any further representations to the United States Government regarding the bombing of North Vietnam, in view of the latest peace initiatives being undertaken by U Thant, Secretary-General of the United Nations.

Mr. George Brown: As the House knows, we, warmly welcomed U Thant's proposals made on 14th March, which included a total military standstill. This would, of course, have applied to United States bombing. Since the proposals were also promptly accepted by the American Government, the need for representations to them did not arise.

Mr. Judd: While I thank my right hon. Friend for that reply, and want at all


costs to avoid over-simplified condemnation of the United States because of the complexities of the situation, would not my right hon. Friend agree that U Thant's initiative, particularly on the question of degree and difference between support for either side within South Vietnam and expansion of the conflict beyond the frontiers of South Vietnam, gives an oportunity for stressing positive policies and thereby encouraging liberal forces within the United States?

Mr. Brown: I think that we can claim that we have been stressing positive policies ever since the party Conference last October, and when I went to the U.N. a month after. I regard U Thant's proposals as fitting in very well with our own ideas, and I therefore warmly welcome them.

Mr. Eldon Griffiths: Will the right hon. Gentleman be very careful about encouraging liberal forces in the United States and confine his dealings to the President and the Secretary of State?

Mr. Brown: I am exceedingly careful about encouraging liberal forces anywhere.

Mr. Barnes: Would my right hon. Friend not agree with what U Thant also said, that the cessation of the bombing of North Vietnam is a prerequisite of further peace moves taking place?

Mr. Brown: As I have said many times in the House, I do not regard that suggestion as realistic.

Mr. Woodburn: Has my right hon. Friend information of any favourable response to U Thant from the North Vietnamese Government?

Mr. Brown: On the contrary, there has been none.

Mr. Hugh Jenkins: asked the Secretary of State for Foreign Affairs whether, in view of recent evidence that action by United States forces in Vietnam has killed, wounded or burned many children, he will dissociate Her Majesty's Government from napalm and phosphorus bombing in Vietnam.

Mr. Leadbitter: asked the Secretary of State for Foreign Affairs what recent steps he has taken to dissociate the United Kingdom from the United States of

America's official proposal to continue bombing North Vietnam.

Mr. George Brown: I have nothing to add to the Answer given by my hon. Friend the Under-Secretary of State to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) on 16th March. [Vol. 743, c. 143.]

Mr. Jenkins: But is not my right hon. Friend aware that the weight of the weaponry deployed by the United States in Vietnam is now so great as to make the genocide of the civilian population almost an accepted and inevitable part of their activity? Is he not condoning policies which result in the killing and burning of women and children, and is he not himself in danger of becoming an accessory to the crime if he continues to condone it?

Mr. Brown: I would not even bother to reply to the accusation at the end of that supplementary question. On the first part of it, I repeat what I have said to my hon. Friend and others many times. All of us deplore all the murder and suffering which is going on in Vietnam today, and should be doing, as I trust I am doing, what we can to bring it all to a halt.

Mr. Lubbock: Is the Foreign Secretary aware that over the weekend there was yet another incident in which innocent civilians were killed by the actions of the United States in bombing their village? Is not this repugnant to the whole of the civilised world? Will the right hon. Gentleman take steps to represent to the United States Government the disgust of the British people at action taken against civilians in South Vietnam?

Mr. Brown: One cannot have wars without killing taking place, some of it deliberately and some of it accidentally. I am in favour of not having wars, and I address this view to North Vietnam, to South Vietnam, and to everybody else concerned.

Mr. Leadbitter: Would my right hon. Friend understand that there is a great deal of anxiety in this country and throughout the world about the kind of war which is going on in Vietnam? Whereas both sides of the House understand the complexities, it is important


that the opinion of Her Majesty's Government should be impressed on Mr. Johnson, the President of the United States, that there is a point beyond which there can be no return. We must impress on him that the suffering and loss of life must be controlled.

Mr. Brown: There is a great deal of anxiety, which I share to the full. I do not believe that addressing that kind of remark to one of the parties will help to bring the suffering and our anxieties to an end.

Mr. Mayhew: Is my right hon. Friend aware that, whatever may be felt about the actions of the United States leading to the present tragedy in Vietnam, the recent publication of correspondence between President Johnson and Ho Chi Minh goes a good way to vindicating the attitude of Her Majesty's Government to American bombing?

Mr. Brown: I am very much obliged to my hon. Friend.

Oral Answers to Questions — U.S.S.R.

Foreign Secretary (Visit)

Mr. Maclennan: asked the Secretary of State for Foreign Affairs what principal maters he intends to discuss on his official visit to the Soviet Union in April.

Mr. Dickens: asked the Secretary of State for Foreign Affairs if he will indicate the major matters he proposes to discuss on his forthcoming visit to the Union of Soviet Socialist Republics.

Mr. George Brown: I shall, of course, be discussing the main international problems and important questions in our bilateral relations with the Soviet Union, but we do not have a fixed agenda on these occasions; nor do we announce in advance what subjects we propose to raise.

Mr. Maclennan: Will my right hon. Friend take the opportunity to advance the proposals outlined during the recent visit to this country of Mr. Kosygin to hold a conference on European security, with the particular object of obtaining international recognition for and guarantee of Poland's Western frontier?

Mr. Brown: My hon. Friend has rather ingeniously linked two quite different points in his supplementary question. To

deal with the first half, the question of a conference on security was discussed when Mr. Kosygin was here and will, no doubt, be discussed when I am in Moscow.

Sir T. Beamish: Will the Foreign Secretary also discuss the effect of a substantial reduction in the B.O.A.R. on the prospects of a détente with the Soviet Union?

Mr. Brown: I am afraid that I must stick to the original Answer, which is that we do not—and it has been the common practice of Governments—announce in advance what subjects we will be discussing at a conference of this kind.

Cultural Exchanges

Mr. Alexander W. Lyon: asked the Secretary of State for Foreign Affairs whether he will make a statement on the new agreement recently signed for cultural exchanges with the Soviet Union.

The Under-Secretary of State for Foreign Affairs (Mr. William Rodgers): The new agreement is for a period of two years and covers relations in the fields of science, technology, education and culture. It follows very much the pattern of the earlier agreement, which was presented to Parliament in May, 1965, but there is an increase in the proposed exchanges which we welcome.

Mr. Lyon: Can my hon. Friend tell the House what proposals the Government have in mind to initiate exchanges of ordinary members of the public under this cultural agreement as distinct from the certainly limited number of cultural activities such as touring, theatre companies or orchestras? What, for instance, could be done to assist school children to visit the Soviet Union under an agreement of this kind?

Mr. Rodgers: If my hon. Friend looks at the agreement, which will shortly be published as a White Paper and will therefore be available in the Library, he will see that it goes very wide indeed. I entirely agree with what my hon. Friend says about the need for exchange between people on a very wide basis indeed.

Ministerial Exchanges

Mr. Ashley: asked the Secretary of State for Foreign Affairs what Ministerial exchanges are proposed between the


Soviet Union and the United Kingdom following the recent visit by Mr. Kosygin.

Mr. George Brown: My right hon. Friend the Minister of Technology is going to Moscow today. The Soviet Minister for Foreign Trade is arriving here this week. I shall be going to Moscow on 19th May. A visit to discuss air services is under consideration and the Soviet Minister of Agriculture will be coming to the United Kingdom next month. A number of other Ministerial visits, in both directions, are under discussion, but I cannot, of course, give details until these have been agreed with the Soviet Government.

Mr. Ashley: I thank my right hon. Friend for that reply. Can he ensure that all possible steps will be taken to further good relations between the Soviet Union and this country? Will he do what he can to reciprocate the gestures of friendship made by Mr. Kosygin to this country?

Mr. Brown: The relations of the two countries are very good, very friendly and very close. As I have shown, we are keeping in touch very closely with each other.

Sir A. V. Harvey: Will the right hon. Gentleman say what progress has been made with the suggested treaty with Soviet Russia which the Prime Minister announced after Mr. Kosygin's visit to this country?

Mr. Brown: As I said in answer to an earlier question, this is being pursued. I hope to be taking it up when I go to Moscow.

Oral Answers to Questions — UNITED NATIONS

Treaty on Outer Space

Mr. Maclennan: asked the Secretary of State for Foreign Affairs when he expects to ratify the United Nations Treaty on Outer Space signed on 27th January, 1967.

Mr. Mulley: Her Majesty's Government will be ready to ratify the Treaty on Principles governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Bodies, as

soon as a common date for the ratification can be agreed with the United States and Soviet Union who are the other two depository States.

Mr. Maclennan: While welcoming my right hon. Friend's reply, may I ask whether, in view of the very considerable importance of this Treaty, particularly in its ban on the use of nuclear weapons in outer space, my right hon. Friend can give any more precise information as to when the ratification may be looked forward to?

Mr. Mulley: For the reasons given by my hon. Friend, we attach great importance to avoiding undue delay in bringing the Treaty into force, but the Treaty itself provides that it can come into force only when the three depository Governments and two other Governments signify ratification. That is why we are hoping to urge the other two depository States to agree on a common date as soon as possible.

Convention on Status of Women

Mr. Marquand: asked the Secretary of State for Foreign Affairs when he expects to ratify the United Nations Convention on the Status of Women.

The Minister of State for Foreign Affairs (Mr. George Thomson): The United Kingdom instrument of accession to the United Nations Convention on the Political Rights of Women was deposited with the Secretary-General of the United Nations on 24th February, 1967.

Mr. Marquand: What are the aims set forward in the draft Convention about equality in economics, social life and education? Would my right hon. Friend accept that these ideals are very far from being applied in practice in this country? Will he arrange for the publication of a White Paper on this setting out the ways in which the Government intend to live up to these ideals?

Mr. Thomson: The question of equality of educational opportunity and equal pay in this country should be addressed to the appropriate Ministers. There will be a Command Paper laying before the House the reservations which have to be made in respect of our economic and domestic policies.

Mr. Kenneth Lewis: Never mind about the United Nations, can the Foreign Secretary say what he intends to do about the status of women?

Committee of Thirty-three

Mr. Alan Lee Williams: asked the Secretary of State for Foreign Affairs what progress is being made in the United Nations Committee of Thirty-three on the future of peace-keeping.

Mr. George Thomson: The United Nations Special Committee on Peacekeeping resumed its meetings on 16th February and is to report to the Special Session of the General Assembly on 21st April. Her Majesty's Government hope that the Committee will consider seriously the possibility of recommending practical measures along the lines of those which my right hon. Friend the Foreign Secretary outlined in his speech to the General Assembly on 11th October, 1966.

Mr. Williams: Would my hon. Friend keep up his pressure on France and the Soviet Union in respect of payment for peacekeeping? I wonder whether he is in a position to confirm a rumour that the Soviet Union is considering paying a sum of money for so-called voluntary peace-keeping?

Mr. Thomson: I have seen the reports, but I am not in a position to confirm them. On my hon. Friend's first point, the Soviet reply on peace-keeping has been very disappointing and does not encourage one to believe that these issues will be resolved. I am putting in the Library copies of the recent speech made by the British delegate on this subject.

Disputes (Peaceful Settlement)

Dr. Ernest A. Davies: asked the Secretary of State for Foreign Affairs what action the United Nations has taken on Her Majesty's Government's initiative on the peaceful settlement of disputes; and what further action is proposed.

Mr. George Thomson: The debate on this subject during the last General Assembly was adjourned sine die.
Her Majesty's Government are about to consult a number of Governments who have supported our proposal in order to determine what the next steps should be. I tike this opportunity to pay tri-

bute to the present work of the David Davies Memorial Institute for International Studies in this field, the results of which we hope will help us to further this British initiative.

Dr. Davies: Would my hon. Friend continue to enlist the aid of all other countries and whatever agencies he can find to promote this highly desirable line of policy? Would he not agree that it is highly regrettable that the Opposition should continue to exercise their prejudice against the peace-making efforts of the United Nations, as they have shown us today, particularly over the question of Aden?

Mr. Thomson: I agree with my hon. Friend on both points.

Oral Answers to Questions — POLAND

Secretary of State (Visit)

Mr. Alexander W. Lyon: asked the Secretary of State for Foreign Affairs whether he will seek to pay a visit to Poland following the visit to Great Britain of Mr. Rapacki, the Polish Foreign Minister.

Mr. George Brown: I have accepted in principle an invitation to visit Poland, and hope to do so, but I have no firm plans at present for this. My right honourable Friend the Minister of State will pay a visit this summer.

Mr. Lyon: Is my right hon. Friend aware that that Answer will give great satisfaction to many people who are interested in furthering better relationships, not only between Britain and the U.S.S.R., but between Britain and the other East European countries, particularly at this moment when we are considering going into the Common Market? Will the Foreign Secretary say whether he proposes to raise again the question of the nuclear-free zone associated with the name of Mr. Rapacki?

Mr. Brown: It is much too soon, even if it were wise, for us to suggest what items will come up for discussion there, but I very much agree with the earlier part of my hon. Friend's Question.

Mr. Dodds-Parker: Has the Foreign Secretary made any progress with Mr. Rapacki in his recent discussions on the


thinning out of conventional forces in Western Europe?

Mr. Brown: We had a very interesting discussion on the whole area, not only the conventional area but nuclear provisions, and, of course, the political questions that go with them.

Consular Convention

Mr. Alan Lee Williams: asked the Secretary of State for Foreign Affairs whether he will make a statement about the Consular Convention recently signed with Poland.

Mr. William Rogers: The Convention marks a welcome step forward in Anglo-Polish relations. It regulates the procedure to be followed when consulates are opened, the privileges and immunities of consular officers, and their functions in protecting the interests of their nationals. As a whole it is very satisfactory from our point of view.

Oral Answers to Questions — OVERSEAS INFORMATION SERVICES

Mr. Marquand: asked the Secretary of State for Foreign Affairs when he expects to receive Sir Harold Beeley's Report on overseas information services.

Mr. R. C. Mitchell: asked the Secretary of State for Foreign Affairs what total expenditure is envisaged on overseas information services during the current and the next three financial years.

Mr. Boston: asked the Secretary of State for Foreign Affairs if he will make a statement about the inquiry into Great Britain's overseas information services being carried out by Sir Harold Beeley.

Mr. William Rodgers: We hope to receive Sir Harold Beeley's Report, following his review of the information services, next month. This will enable us to consider the programme for future years. The provision proposed for overseas information services for the coming year is £28,249,000.

Mr. Marquand: Does my hon. Friend agree that the money we spend on overseas information services is almost certainly for more cost-effective in terms

of value to this country than any other form of overseas Government expenditure? Can he therefore give an assurance that there will be no cut in the amount expended on overseas information without our having a very full debate in the House? Further, can he say whether the Beeley Report will be published?

Mr. Rodgers: I agree that we get very good value for the money we spend on overseas information, but I am sure that we should await Sir Harold Beeley's Report before making any decisions. In reply to my hon. Friend the Member for Putney (Mr. Hugh Jenkins), I indicated that we were bearing in mind the possibility of publishing the Report.

Mr. R. C. Mitchell: Has my hon. Friend in mind any special areas on which he intends to concentrate for developing our overseas information services?

Mr. Rodgers: I do not think that at this stage I can indicate what our own view is. As I say, we must see Sir Harold Beeley's Report first.

Mr. Dodds-Parker: Will the Under-Secretary of State realise that there will be strong support on all sides for maintaining our overseas information services and that there are other candidates, such as Government hospitality, for a cut rather than our overseas information services?

Mr. Rodgers: As I have said, the information services are most important and we certainly wish to maintain and expand them as far as possible.

Lord Balniel: Has there not already been a reduction in Government overseas information services, and does not this entail diminution of British influence? Is not this aggravated by the fact that there has already been a reduction in the overseas aid programme? Will the Government consider the two problems together?

Mr. Rodgers: These two problems do fit together and are part of the same sort of story, but in asking Sir Harold Beeley to review the services we had in mind that we have to take a broad look at them and there are services in which perhaps we could look for an improvement.

Oral Answers to Questions — DIPLOMATIC SERVICE

Mr. Moyle: asked the Secretary of State for Foreign Affairs what proposals he has for the improvement of recruitment to the Diplomatic Service from universities other than Oxford and Cambridge.

Mr. George Thomson: An extensive, vigorous and continuous campaign is being carried out at various levels by the Diplomatic Service to attract more recruits from the other universities.

Mr. Moyle: Is my hon. Friend aware how pleased I am that the Government are taking an interest in this matter in view of the fact that the current figures show a recruitment disparity between the older universities and the newer universities and do not reveal the true spread of ability between the State education system and the public schools system?

Mr. Thomson: I agree with my hon. Friend and I find the figures disappointing. This is partly a question of publicity. We send people round all the provincial universities and try to increase recruitment there. The kind of Question asked by my hon. Friend does attract the right kind of publicity and should lead to what we want.

Mr. Fortescue: Will the hon. Gentleman assure the House that he has the fullest confidence in the present members of the Diplomatic Service, most of whom are graduates from Oxford and Cambridge?

Mr. Thomson: Yes, Sir, the present selection process is designed to produce people of the best ability to come before the Civil Service Commission, but my hon. Friend the Member for Ashfield (Mr. Marquand) was absolutely right in saying that many people at provincial universities are well equipped to be good members of the Diplomatic Service.

Mr. Henig: Is my right hon. Friend aware that the nature of the examination for the Diplomatic Service is such as to discriminate in favour of students from Oxford and Cambridge and the kind of training given at newer universities, while quite excellent, is not the kind of training to enable them to compete in this examination on equal terms? Will he do something about this?

Mr. Thomson: No, I cannot accept what my hon. Friend says about the examination itself. There is no evidence that it discriminates between universities. The fact is that many people do not come forward from the provincial universities because of a mistaken idea that the Diplomatic Service is not—to use a usual phrase "for the likes of them". That is what we have to contend with.

Mr. Marten: Surely they do not come forward because they are not suitable?

Mr. Thomson: The hon. Member has shown how mistaken he is in his ideas. There are obviously substantial numbers of people at provincial universities who are well qualified to enter the Diplomatic Service, but in fact they give priority to other walks of life and we are not making our adequate claim on people coming from provincial universities.

Mr. Rhodes: asked the Secretary of State for Foreign Affairs what are the powers and duties of the Diplomatic Service liaison officer.

Mr. George Thomson: They are to seek out means of improving communication between the Diplomatic Service on the one hand, and Parliament, the Press and other public and academic bodies on the other.

Mr. Rhodes: Contrary to the impression given earlier to the hon. Member for Banbury (Mr. Marten), is not my right hon. Friend aware that over a ten-year period there were more than 2,000 applications to join the Diplomatic Service from people with good honours degrees at provincial universities? Will he find out why so few passed into the service?

Mr. Thomson: I think, with respect, that my hon. Friend is on his next Question.

Mr. Rhodes: asked the Secretary of State for Foreign Affairs what discussions he has had with the principals of provincial universities regarding the need for improvement of recruiting into the Diplomatic Service.

Mr. George Thomson: In December, 1965, the Vice-Chancellors of eleven provincial universities, and the Director of the London School of Economics, discussed questions of recruitment with my


predecessor. Both before and since then members of the Diplomatic Service have maintained extensive and regular contacts with the academic staff, appointments secretaries and undergraduates of practically all universities in the British Isles.

Mr. Rhodes: As my supplementary on this Question, may I ask my right hon. Friend whether he is aware that what he has just said will be widely appreciated by those who are seeking to broaden the basis of recruitment to the Diplomatic Service? Will he bear in mind the need to keep up the pressure to tap the talent which exists in the provincial universities, especially in the north of England, not only in the interests of the universities themselves but of the Diplomatic Service?

Mr. Thomson: Yes Sir. We are constantly seeking methods of broadening the basis of recruitment. Of the 180-odd undergraduates who have visited the Foreign Office and seen it for themselves in recent years, two-thirds have come from provincial universities and our attention is particularly directed there.

Mr. St. John-Stevas: Surely the important thing is to recruit the best qualified people, irrespective of university, to the Foreign Office. Will the right hon. Gentleman give an undertaking that graduates of the older universities will not be discriminated against as graduates from one of the famous public schools have been discriminated against in recent years?

Mr. Thomson: I do not think that the hon. Gentleman need have any fear in that direction. The present problem is that the number of entrants into the Diplomatic Service from Oxbridge and a fairly narrow sector of education is disproportionate. We are losing good candidates and are anxious not to do so, but the selection process is completely non-discriminatory and it selects the best people who come before us.

Mr. Philip Noel-Baker: What percentage of the present Foreign Office staff come from the eminent educational establishment on the banks of the Thames known as Eton College?

Mr. Thomson: I cannot answer that without notice.

Sir S. McAdden: Why should it be considered necessary to adequate representation that the Diplomatic Service people should be recruited from universities? Is not the right hon. Gentleman aware that many hon. Members have never been to university but would make a substantial contribution to the Diplomatic Service? Let us get rid of this nonsense.

Hon. Members: Hear, hear.

Mr. Thomson: The hon. Gentleman has an important point there, and we try to take account of it by making special arrangements for what is known as mature entry into the Foreign Service.

Sir S. McAdden: I am very grateful.

Oral Answers to Questions — FOREIGN OFFICE MINISTERS (ECONOMIC ADVICE)

Mr. David Watkins: asked the Secretary of State for Foreign Affairs whether he will take further steps to improve the economic advice available to Foreign
Office Ministers.

Mr. Mully: Yes, Sir, as far as may be necessary.

Mr. Watkins: Is my right hon. Friend satisfied that the information which is received from outposts of the Foreign Office is accurate and that adequate machinery exists in the Foreign Office for a correct interpretation of that information?

Mr. Mulley: The main economic functions of the Government do not, of course, rest with the Foreign Office, but we are constantly examining the possibilities of strengthening the economic service in the Foreign Office and in the foreign field. My hon. Friend is wrong if he thinks that in the various embassies and consulates-general we do not do a very good job on the economic side.

Mr. St. John-Stevas: In view of his reply, will the right hon. Gentleman see that this important service is made available to Treasury Ministers as well?

Mr. Shinwell: Could we have an answer to that question? Would it be possible—

Mr. Speaker: Order. I thought the hon. Gentleman had asked a rhetorical question. Mr. Dodds-Parker.

Mr. Dodds-Parker: Will the right hon. Gentleman remove the foreign advisers to the Economic Ministers?

Oral Answers to Questions — EASTERN EUROPE (EMBASSY STAFF)

Mr. Ashley: asked the Secretary of State for Foreign Affairs what steps he proposes to improve the staff of embassies in Eastern Europe to enable them to play a more active part in promoting East-West trade.

Mr. George Thomson: The efficiency and staffing of all commercial posts is kept under constant review, but I am satisfied that the staff at our embassies in Eastern Europe is generally adequate in both quality and numbers, and is playing a very active part in our export drive.

Mr. Ashley: Would the Minister accept that this is the right psychological moment for bridge-building between Eastern and Western Europe? Does he regard this Improvement in embassy staffs as only the first stage of a general improvement in relations with Eastern Europe?

Mr. Thomson: Yes. I am going to Prague on Wednesday and I hope to add at least a brick or two to the bridge mentioned by my hon. Friend.

Sir H. Legge-Bourke: Could the right hon. Gentleman say whether the Government are now reconsidering the number of scientific attachés in our overseas embassies in the light of the increasing concern shown on both sides of this House about the present limitation to the number to six only?

Mr. Thomson: We attach great importance to the work done by scientific attaches, but that is another question. If the hon. Gentleman cares to put it on the Order Paper, I shall be glad to answer it.

Mr. Mikardo: Is my right hon. Friend aware that while one must always seek improvement in fact the work of the staff of the commercial sections of our embassies in Eastern Europe has shown an enormous improvement in recent years?

Mr. Thomson: I am much obliged to my hon. Friend for that tribute which I know comes from experience in this field. It is borne out by figures. The value of exports to Eastern Europe increased by 30 per cent. in the last five years and in the last two years by 50 per cent.

Oral Answers to Questions — SOUTH ARABIA AND ADEN

Mr. Luard: asked the Secretary of State for Foreign Affairs when he hopes to be able to announce new constitutional proposals for South Arabia and Aden.

Mr. Dodds-Parker: asked the Secretary of State for Foreign Affairs when he expects to present the White Paper on Aden.

Mr. George Brown: I very much regret that I am unable at the moment to add anything to what I told the House on 20th March.—[Vol. 743, c. 1082.]

Mr. Luard: Is my right hon. Friend aware that recent Press reports that the Government are now taking a completely new look at the constitutional position in South Arabia will be widely welcomed in this House and elsewhere? Does not he agree that there is an urgent need for a constitutional structure in South Arabia that takes careful account of the very different background and aspirations and objectives of the people in Aden itself and those of the Federation as a whole?

Mr. Brown: I note what my hon. Friend says but, with his distinguished past in the Diplomatic Service, he will know just how much faith to place in reports he reads in the newspapers.

Mr. Dodds-Parker: Can we expect the White Paper the right hon. Gentleman has promised before the Whitsun Recess?

Mr. Brown: I do not recall that I promised a White Paper that early. A number of consultations have still to be completed, and I doubt whether I would be in a position to publish a White Paper before the Whitsun Recess.

Lord Balniel: The right hon. Gentleman said in his reply that he could add nothing to his speech, but does not he agree that his speech told us very little? Does he adhere to the previous time


limits for independence and British military withdrawal, or are these in the melting pot at the moment?

Mr. Speaker: Order. This Question is about constitutional proposals.

Lord Balniel: On a point of order, Mr. Speaker. With great respect, I submit that the independence of the Federation of South Arabia is surely a constitutional point.

Mr. Brown: What I said in my reply was that I could add nothing to what I told the House on 20th March. If the hon. Gentleman consults his memory, he will recall that I made a detailed statement and answered questions fully for more than half an hour. He will find everything he needs to know in those exchanges. I cannot add anything today to what I said then.

Mr. Winnick: asked the Secretary of State for Foreign Affairs whether he will make a statement on the latest position in Aden.

Mr. Marten: asked the Secretary of State for Foreign Affairs if he will make a statement about the situation in Aden.

Mr. Fisher: asked the Secretary of State for Foreign Affairs whether he has a statement to make arising from the visit of the United Nations Mission to Aden.

Mr. Wall: asked the Secretary of State for Foreign Affairs if he will make a further statement on the situation in Aden.

Mr. A. Royle: asked the Secretary of State for Foreign Affairs if he will make a statement on the situation in Aden.

Mr. George Brown: There is great interest and much concern over South Arabia and perhaps the House will, therefore, forgive a longer reply than usual.
I told the House on 10th April that I wanted to talk over the whole situation with the United Nations Mission. I had this opportunity yesterday. We had a very full discussion, and I shall be seeing them again today. I remain convinced that the United Nations can play a very useful rôle in the solution of the problems in South Arabia, and I hope that it will do so.

Mr. Kenneth Lewis: On a point of order, Mr. Speaker. Would it not be preferable to get on with Questions and take this—

Mr. Speaker: Order. The point of order is useful, but it is taking time.

Mr. Brown: I shall certainly consult the convenience of the House. I thought it better to take this matter now, but if the House would rather not perhaps it could come later.
Much of the time yesterday was spent going over with the Mission what might be possible in future, and considering what help the present Mission as a team could give. In the end, we reached broad agreement on a number of important points; for example, the need accepted by all for a central caretaker Government. We also discussed my suggestion that some kind of round table talks involving all concerned will be necessary at some point as a preliminary to any progress, and I repeated to the Mission the importance I attached to people abandoning violence and coming to the conference table. I said that I looked to the United Nations to play an important rôle in this. Meanwhile the Mission, in their own words, "remain on the job". They plan to leave for New York tomorrow. All concerned will, of course, have to do more hard thinking, and I prefer to leave it at that today.
I am glad to say that the situation in Aden has continued to be much quieter in the last week.

Mr. Winnick: I thank my right hon. Friend for his reply. Though recognising the delicate position of the talks, may I ask him this question? Are the Government determined to undo the blunders of the last Administration and allow Aden to leave the Federation? Second, can he say whether the United Nations Mission will be going back to Aden itself?

Mr. Brown: On the first point, I have a strong feeling that the way in which the Federation was put together and the reasons for which it was put together were probably a mistake at the time. On the other hand, it would be unrealistic to talk in terms of Aden town living on its own in present circumstances. On the second point, the question of the timing


of any return by the Mission to Aden has not yet been decided.

Mr. Marten: But does not the right hon. Gentleman recall saying in the debate last week that none of the Adenis in the Federal Government wished to opt out of the Federation? Is not the real trouble in Aden that Colonel Nasser objects to the United Nations because it would frustrate his take-over bid?

Mr. Brown: There is no reason that I could adumbrate for my taking that latter position. The hon. Gentleman, of course, is entitled to his opinion. On the first point, what I said just now fits in with what I said the other day.

Mr. Fisher: In view of the predictable and predicted failure of the United Nations Mission and its self-stated prejudice against Britain—[HON. MEMBERS: "No."]—what is now the Government's policy for salvaging a situation made immeasurably more serious by their own policy errors during the past year?

Mr. Brown: That comes very ill from right hon. and hon. Gentlemen opposite. In this situation I think they do the interests of Britain and the interests of South Arabia no good at all by these continuous attacks, which come out of their prejudice against the United Nations.

Mr. Wall: Whatever may be the future rôle of the United Nations in this problem, is not the present Mission so discredited that its return to Aden would do great harm, and will not the Foreign Secretary now give full backing to those who have to bear responsibility in the High Commission and the Federal Government?

Mr. Brown: I do not understand how the hon. Gentleman can imagine, with the Mission here and the present state of our discussions, that such a remark as that could be regarded as other than pretty disgraceful.

Mr. Francis Noel-Baker: my right hon. Friend confirm, particularly in view of the two last mischievous supplementary questions, that it is Her Majesty's Government's hope that the Mission will continue and complete its work and, in due course, return to Aden?

Mr. Brown: I repeat what I said, if I need to do so, that I believe that the United Nations has a very useful rôle to play in this situation. I hope that it

will do so. It is our business and that of everyone else who is concerned for a solution to the problems of South Arabia to co-operate with it in doing so.

Sir Alec Douglas-Home: Leaving aside the present Mission, if I may—I think it doubtful that they can be useful—has the Foreign Secretary taken up the suggestion, as the danger to Aden largely comes from the Yemen, that the United Nations might define the frontier between South Arabia and the Yemen and place observers there? This seems to me to be useful.

Mr. Brown: Obviously, this is one of the matters which may well come up in the work of the Mission. Clearly, if that is the right hon. Gentleman's view, he ought to discourage his hon. Friends from making the remarks which they have just been making.

Mr. Lee: Do I take it that my right hon. Friend at least keeps an open mind about the possibility of dissolving the Federation, which is really the cause of all the trouble?

Mr. Brown: As I said just now, whatever the merits of what was done, the way it was done and the reasons for which it was done at the time when it was done, I do not see how Aden can live by itself without the hinterland in the world of today. What we have to address ourselves to is how to get a new broadly based representative Government, representative geographically as well as in other ways, and constitutional arrangements acceptable to all, so that it can become genuinely independent and become a member of the United Nations.

Mr. A. Royle: In view of the extraordinary behaviour of this particular United Nations Mission when it was in Aden—[HON. MEMBERS: "No."] would it not be wiser to press for a fresh mission made up of different people to visit Aden rather than this Mission, which has so significantly failed?

Mr. Brown: Clearly, it would be wise if the hon. Gentleman were to have a word with his right hon. Friend.

Oral Answers to Questions — OFFENSIVE AND DEFENSIVE MISSILES (TALKS)

Mr. Luard: asked the Secretary of State for Foreign Affairs whether he will seek to take part in the discussions on


offensive and defensive missiles begun between the United States and Soviet Governments.

Mr. George Brown: We welcome the decision to hold these talks and have been and shall continue to be in close touch with the United States and Soviet Governments about them. But the best prospect of progress in this vital field lies in the direct exchanges which these two Governments have decided to initiate.

Mr. Luard: Does not my right hon. Friend agree that it is unlikely that it will be possible to persuade the Soviet Government to forgo the construction of an anti-ballistic defence system without some corresponding assurance about the level of offensive missiles on the Western side? Does not he agree that this country has an important part to play in influencing discussions on this point?

Mr. Brown: I agree that we have a very important part to play and, like everyone else, we have a very close interest in the outcome. That is why we are in the closest touch with both Governments. Defensive and offensive missiles clearly have a relationship, and that is why I welcomed what President Johnson said on 3rd March about the means of limiting these missiles. One must recognise that the development of antiballistic missile defensive systems would give a new impetus to the nuclear race. Obviously, therefore, we have a considerable interest in trying to avoid that situation.

Oral Answers to Questions — INDONESIA (AMSTERDAM TALKS)

Mr. Dewar: asked the Secretary of State for Foreign Affairs whether he will make a statement on the recent Amsterdam talks on Indonesian financial problems.

Mr. William Rodgers: At these talks, which took place on 13th and 24th of February, there was a comprehensive review of Indonesia's financial situation. We are at present considering whether there is anything further we can do to assist the Indonesian Government in their economic recovery programme.

Mr. Dewar: While appreciating the exploratory nature of the talks, may I ask my hon. Friend to bear in mind the important contribution that civil aid from Britain might make to Indonesia and to the stability of the area, quite apart from the valuable return in trade which might also result?

Mr. Rodgers: As my hon. Friend knows, the Government gave Indonesia a grant of £1 million to help the new Government last year, and we have also restored the technical assistance programme under the Colombo Plan. We will do all in our means to help.

Mr. Dalyell: Will the Foreign Office consider the practical proposal and use its influence on other Governments to push forward the proposals to supply trucks and tractors from the British Motor Corporation?

Mr. Rodgers: We shall play our part in trying to encourage trade, but there are serious problems that the Indonesian Government have to overcome before there can be the exchanges that we would like to see.

Oral Answers to Questions — BRITISH TOURISTS (INSURANCE)

Mr. Tinn: asked the Secretary of State for Foreign Affairs what steps he is taking to inform British tourists about the need to provide themselves with adequate insurance against illness and other hazards of foreign travel.

Mr. William Rodgers: The need for adequate insurance is emphasised in two pamphlets distributed to all applicants for passports and foreign exchange. Copies have been placed in the Library. With the encouragement of the Foreign Office, the Association of British Travel Agents, the British Insurance Association and the motoring associations all publicise the need for adequate travel insurance.

Mr. Tinn: That answer is welcome, but will my hon. Friend do all he can to increase the number of reciprocal agreements with foreign countries, so that citizens of both countries may enjoy mutual benefits of adequate sickness insurance arrangements?

Mr. Rodgers: I agree that reciprocal arrangements are important and there are not enough of them. We shall do what we can.

Oral Answers to Questions — PASSPORT OFFICE (TEES-SIDE)

Mr. Tinn: asked the Secretary of State for Foreign Affairs when he will open a passport office on Tees-side.

Mr. William Rodgers: New passport offices will be opened in Peterborough and Newport (Monmouthshire) at the end of this year. Should the demand for passports continue to increase, it may later be desirable to open additional offices, and, in that event, the claim of Tees-side will certainly be considered.

Mr. Tinn: In considering Tees-side's claim in that event, will my hon. Friend net forget—I am sure that he will be the last to do so—that the new county borough of Tees-side will be second only to Birmingham in size and, therefore, should rank high in the queue for Government offices?

Mr. Rodgers: I agree that Tees-side is an excellent location for new offices, offering admirable facilities and a great deal of local good will.

Oral Answers to Questions — NUCLEAR NON-PROLIFERATION TREATY

Mr. Winnick: asked the Secretary of State for Foreign Affairs when it is expected that a nuclear non-proliferation treaty will be agreed; and if he will make a statement.

Mr. Dodds-Parker: asked the Secretary of State for Foreign Affairs, what proposals he is making to ensure that any treaty on non-proliferation safeguards the rights of smaller countries to develop commercially their non-military nuclear projects.

Mr. Frank Allaun: asked the Secretary of State for Foreign Affairs if he will make a statement on progress towards a nuclear non-proliferation agreement.

Mr. A. Royle: asked the Secretary of State for Foreign Affairs when he

expects to sign a nuclear non-proliferation treaty.

Mr. George Brown: The Eighteen Nation Disarmament Committee has now adjourned for a short period, to allow for further discussions on the nonproliferation proposals within the Eastern and Western Alliances. We hope that these discussions will result in the tabling of a draft non-proliferation treaty when the Committee resumes. It is accepted by all concerned that the development of civil nuclear technology must be fully safeguarded by the treaty.

Mr. Winnick: Would my right hon. Friend not agree that it seems that the biggest obstacle to signing such a treaty is West Germany? Has he seen Herr Strauss's recent statement that a united Europe must be nuclear armed? Is not that man dangerous?

Mr. Brown: I do not regard that as a very helpful remark, nor do I accept Press reports as being any more likely to be accurate when they refer to foreign statesmen than when they refer to our own. On the first part of the question, what my hon. Friend alleges is not true. Many non-nuclear Powers are necessarily concerned to see that the treaty does not improperly discriminate against them. It is true of many, if not all, and not especially true of any one of them.

Mr. Dodds-Parker: Will the Foreign Secretary at least be prepared to accept the same safeguards for peaceful uses of nuclear equipment as are being required of non-nuclear weapons countries?

Mr. Brown: We are certainly considering what we can do in that regard.

Mr. Frank Allaun: Would it not encourage the non-nuclear nations to renounce such weapons if we gave up our own? Did not the Government promise three years ago that they would get rid of our own so-called independent nuclear deterrent?

Mr. Brown: We have said that we have internationalised our own. That we have done. The question whether any of us should at any stage, as it were, get rid of the weapons we have would be a matter for negotiation. One would want to see what came in return for it.

Mr. Hogg: Is it not a fact that civil reactors will be producing plutonium


from 1970 onwards as a necessary byproduct of their action, and is not the clue to the answer a proper inspection and accountability for fissile material?

Mr. Brown: That is a very large part of the answer, and the safeguard clauses being suggested for the treaty must take that into account.

Mr. Philip Noel-Baker: Will my right hon. Friend confirm that a non-proliferation treaty makes no sense unless, as the Indian delegate has insisted, it is a first step to nuclear disarmament, with inspection by the international authority of all powers?

Mr. Brown: I suppose that one could argue that nothing in this sphere makes any sense unless we reach nuclear disarmament, but everything that is a step towards reaching it makes a lot of sense.

Sir T. Beamish: I understood the right hon. Gentleman to say that we have internationalised our nuclear weapons. Did I hear him correctly, and if so, what did he mean?

Mr. Brown: I mean that we do not target ours nationally. We are part of the international targetting arrangements.

Mr. Shinwell: Is not the reluctance of the West German Government to accept the non-proliferation treaty due to their desire some day—and it may be soon—to gain control and use of nuclear weapons? Would that not constitute a danger to peace?

Mr. Brown: I think that there is a good deal in what my right hon. Friend said.

Oral Answers to Questions — FOREIGN OFFICE (JOINT CONFERENCES)

Mr. R. C. Mitchell: asked the Secretary of State for Foreign Affairs what steps he takes to organise joint conferences between Foreign Office personnel and university and other experts on international problems.

Mr. George Thomson: In conjunction with the universities, the Foreign Office organises several seminars each year to discuss subjects of current importance in international affairs. I welcome the

opportunity these seminars provide for the exchange of ideas between officials and academic and other experts.

Mr. Mitchell: Do any of the leading foreign correspondents of our newspapers attend those seminars in a confidential capacity?

Mr. Thompson: Some of the conferences have been attended by journalists. I should be glad to look into that and give my hon. Friend further information.

Oral Answers to Questions — GERMANY (BRIAN COWELL)

Mr. Loveys: asked the Secretary of State for Foreign Affairs whether he is satisfied with the correctness of the translation made by his Department of the sentence passed by the German Court on Brian Cowell given in reply to the honourable Member for Chichester (Mr. Loveys) on 30th July, 1964; and if he will make a statement.

Mr. William Rodgers: The charge on which Brian Cowell was sentenced was described as "murder in the course of robbery with extreme violence". Literally translated, the relevant extract from the German Penal Code could be rendered into English as "murder in conjunction with especially grave robbery".
The literal translation has no meaning in English law. The description originally given was intended to provide an indication of the comparable charge.

Mr. Loveys: Is the hon. Gentleman aware that the parents of Brian Cowell, who are constituents of mine, are most concerned with the use of the words "extreme violence", which did not appear in the actual court transcript? Would the hon. Gentleman change the description of the sentence to bring it more into line with the literal translation?

Mr. Rodgers: I think that what I have said this afternoon should go some way to reassure the hon. Gentleman's constituents.

Oral Answers to Questions — FOREIGN MEDALS AND ORDERS

Sir J. Langford-Holt: asked the Secretary of State for Foreign Affairs in view of the misunderstanding and resentment which exists in European countries


because of the rule that medals and orders presented to British citizens by the heads of foreign States may not normally be worn by the recipients, whether he will now advise that these regulations be amended.

Mr. William Rodgers: I have nothing to add to the reply I gave to the hon. Member for Liverpool, Wavertree (Mr. Tilney) on 27th February on this subject. [Vol. 742, c. 14.]

Sir J. Langford-Holt: Can the hon. Gentleman say that an inquiry is under way, or has the policy changed since Mr. Macmillan told me that an inquiry was under way—in 1952, I think it was: and that the regulations are being reviewed?

Mr. Rodgers: I said the other day that we were considering whether some change would be justified. That is precisely what we are doing.

Oral Answers to Questions — MIDDLE AND FAR EAST (INTERNATIONAL SECURITY)

Mr. Judd: asked the Secretary of State for Foreign Affairs what proposals he will make to the United Nations on effective systems of international security, particularly in the Middle and Far East.

Mr. George Brown: I made proposals in my speech to the Assembly on 11th October, 1966, designed to strengthen the United Nations effectiveness in peacekeeping operations undertaken with the consent of the States concerned. In the separate field of enforcement action, Her Majesty's representative in the Special Committee on Peacekeeping has just said again that if the Security Council consider the time ripe, we would welcome progress towards negotiating agreements under Article 43 of the Charter.

Mr. Judd: While I thank my right hon. Friend for that reply, may I ask him whether he does not agree that Aden has illustrated the accentuated problem for the United Nations when called in at the eleventh hour? What precise proposals are we preparing for filling the gap beyond Suez when we withdraw from that area?

Mr. Brown: I do not think it right to say that the U.N. was called in at the eleventh hour; certainly they were not as

far as we were concerned. A great deal of effort was needed to get the United Nations to set up the mission to go there. As to whether the United Nations could play a peace-keeping rôle in that situation, I think that, on the whole, the proposition might come rather better from the mission while it is in existence.

Sir Alec Douglas-Home: When the right hon. Gentleman is in Moscow, will he call the attention of the Soviet leaders to the increasing quantities of Russian arms going, for instance, to Syria and Somaliland, and inquire what they are for? Has he any evidence that discussions are taking place between the Soviet Union and Egypt about the provision of ground-to-ground missiles?

Mr. Brown: I would need notice of the second part of that question. With regard to the earlier part, while standing on what I said—that one does not disclose in advance what we are discussing—I shall take note of what the right hon. Gentleman said.

Mr. Ian Lloyd: Will the right hon. Gentleman, in his search for effective systems of security in the Middle East and other uncertain areas, bear in mind in this extremely fluid age the undoubted virtues of staying put?

Mr. Brown: Staying put in the situation in the Middle East would, I think, lead to an awful lot of disasters coming on us.

Oral Answers to Questions — PERSIAN GULF

Mr. Moyle: asked the Secretary of State for Foreign Affairs what progress is being made in promoting Her Majesty's Government's modernisation policies in the Persian Gulf.

Mr. George Thomson: We have made considerable progress in the past year in helping the Rulers to modernise their administrations and promote social and economic development. Perhaps the most spectacular development has taken place in Abu Dhabi under the new Ruler Shaikh Zaid. In Bahrain the Government have taken over a large sector of jurisdiction which we formerly exercised, and abroad it has joined a United Nations agency for the first time.

Mr. Moyle: Can my hon. Friend guarantee that there will be further and continued progress along these lines towards democracy and stability, since, in my view, the build-up of the stability of local States and local methods of maintaining law and order will bring nearer the day when we can look forward to defence cost savings in this part of the world?

Mr. Thomson: I have found it impossible to guarantee anything in international affairs, but I guarantee that we shall continue to try to make the kind of progress which my hon. Friend seeks.

Mr. Thorpe: Although great progress has been made in the Sheikhs' Council of Rulers in the Persian Gulf, would the hon. Gentleman see whether more developments could be made on the economic front rather on the lines of the East Africa High Commission?

Mr. Thomson: Yes; we are very conscious of this. As the right hon. Gentleman knows, the Trucial States Development Fund was set up by the present Government a year or so ago with a capital grant of over £1 million. Work has been continuing on an all-weather road link between the Trucial States. We shall push ahead with these constructive proposals.

Oral Answers to Questions — SOUTH-EAST ASIA TREATY ORGANISATION

Mr. Eadie: asked the Secretary of State for Foreign Affairs whether he is satisfied that the South-East Asia Treaty Organisation continues to serve the purpose for which it was set up; and if he will make a statement.

Mr. George Brown: Yes, Sir.

Mr. Eadie: I think that the House will feel disappointed that the Foreign Secretary was so brief this afternoon. Would he be a little more forthcoming in answering the question about the review of S.E.A.T.O.?

Mr. Brown: I cannot answer the question about the review of S.E.A.T.O. because I am proceeding there in about two hours from now to take part in that very thing. My answer could not have been more forthcoming. It was, "Yes, Sir."

Mr. James Davidson: In view of the very small British representation on the S.E.A.T.O. Headquarters in Bangkok, would the right hon. Gentleman say whether he is satisfied that we are exerting sufficient influence on the contingency planning?

Mr. Brown: I certainly think so, but I will look into the matter in the light of what the hon. Gentleman has said.

Oral Answers to Questions — BURMA (EXCHANGE CONTROL RESTRICTIONS)

Mr. Bob Brown: asked the Secretary of State for Foreign Affairs what recent representations have been made to the Burmese Government about hardships caused to former British residents in Burma who have been prevented from withdrawing their life savings under the exchange control restrictions.

Mr. William Rodgers: Representations have been made to the Burmese Government on frequent occasions over the past year both in respect of individual cases and on the general principle of allowing remittances where hardship is being caused.

Mr. Bob Brown: While thanking my hon. Friend for that reply, may I ask if he would assure me that, in fact, we shall maintain our pressure on the Burmese Government in the interests of the people who spent many years of their working lives in that country?

Mr. Rodgers: Yes, we shall certainly continue to do all we can.

Mr. Dalyell: What reasons do the Burmese Government give for being sticky on this matter?

Mr. Rodgers: They have given no specific reasons, but I think they have looked sympathetically at the whole subject, which has been raised with them on frequent occasions. The trouble is that there has not been a great deal of movement as a result.

QUESTIONS TO MINISTERS

Lord Balniel: As we come to the end of these Questions may I raise a point of order which, Mr. Speaker, I think is of some importance to the whole


House and to back benchers in particular?
The Foreign Secretary, even not counting Recesses, answers Questions which are at the top of the Order Paper only once every six weeks. I think that the whole House agrees that it is a very valuable opportunity for questioning the Foreign Secretary personally on day-to-day issues of foreign affairs.
The first possible occasion on which one could have put down Questions for today was Friday, 13th March. The publication of the Order Paper on Monday, 16th March, showed that 47 Questions had been put down—in fact, filling the Order Paper—and that 43 of them were put down by back benchers opposite. [HON. MEMBERS: "Why not?"] The whole House will appreciate that although they were of some importance most of them were of secondary importance—

Hon. Members: No. Withdraw.

Mr. Speaker: Order. I am listening to a point of order. Hon. Members must not be too sensitive.

Lord Balniel: The only Question on Vietnam was deferred from a previous occasion.
It seems quite clear that there was not a sudden, spontaneous upsurge of interest in the ratification of various conventions, but that this was a policy designed to avoid embarrassment to the Government.

Mr. Frank Allaun: On a point—

Mr. Speaker: Order. I am being addressed on a point of order. I cannot have a point of order within a point of order.

Lord Balniel: I do not deny—

Mr. Winnick: Make it snappy.

Lord Balniel: —that over a month ago, at 8 o'clock in the morning, we could have put down a whole number of Questions, but it seems to me an absolutely idiotic performance—[HON. MEMBERS: "Oh."]—and I should like to ask you, Mr. Speaker, whether—and this is my point of order—the good sense of the House of Commons as a whole demands that we do not repeat a performance of this kind, or, alternatively, whether you

will refer the matter to the Select Committee on Procedure to see whether it can find a way of avoiding what, frankly, I think was an abuse of the proceedings of the House.

Mr. George Brown: Further to that point of order. The hon. Gentleman ruined a perfectly good point by some allegations which I am quite sure he will regret. In particular, none of the Questions he referred to was in fact either instigated or sought at all. On the other hand, there is here a serious problem I am myself concerned about and which I myself raised long before the hon. Member thought of making that rather—if I may say so—unfortunate speech.
I would very much welcome more frequent opportunities to answer Questions here. The difficulty is that some other Department has to be put aside in order for me to do so. There are other candidates—the Ministry of Defence, for example—who ought to come first more often, and my right hon. Friend the Secretary of State for Defence is in the same position as I am; he, too, would like to answer Questions. This is eminently a matter for discussion through the usual channels, and we are more than willing to discuss it.

Sir Alec Douglas-Home: What the right hon. Gentleman says would be agreeable to the House if it could be achieved, so that he would be able to answer Questions more often, but is not the point raised by my hon. Friend this: that it is a very undignified proceeding that there should be a sort of race at 8 o'clock in the morning, at the first possible opportunity, of hon. Members to put down blocks of Questions in order to exclude others? Can you not help us, Mr. Speaker?

Mr. Lubbock: rose—

Mr. Speaker: On the same point of order?

Mr. Lubbock: Yes, Mr. Speaker, on the same point of order.
Is this not really a matter which ought to be referred to the Select Committee on Procedure rather than dealt with through the usual channels where the House as a whole is not involved?

Several Hon. Members: rose—

Mr. Speaker: Order. Perhaps I may be allowed to deal with the point of order.
I am grateful to the hon. Member for Hertford (Lord Balniel) for giving me notice that he intended to raise this question of order at the end of Question Time. May I assure the House that I am deeply interested in Question Time, and devote not only question hour but quite a lot of time in the mornings to endeavouring to secure that everybody in the House has a fair chance at Question Time.
On the specific issue the hon. Member has raised, it is in no way a matter for the Chair. I am in charge of the House only on matters of order. The present position is that each hon. Member is entitled to ask two Oral Questions a day, and provided that the Questions are submitted by the Member or with his authority the origin or the genesis of the Questions has nothing to do with the Chair. Even assuming that the hon. Member's suspicions were justified—which, of course, I do not know—I would still have no power to intervene.
Nothing has been done today or at Question Time during the time I have been in charge—as far as I am aware—that has been out of order. The questions which the hon. Member has raised are questions of argument between the two sides of the House, and I have no power to intervene.

Sir T. Beamish: Further to that point of order. As the Leader of the House is here, and since this is a question of very great importance to both sides of the House, would you, Mr. Speaker, give him the opportunity of making a reply, if only the briefest, on that proposal?

Mr. Speaker: It is always in order for the right hon. Gentleman to seek to catch my eye.

Sir T. Beamish: Will not the right hon. Gentleman get up?

Mr. Speaker: It is always in order for hon. Members who are aggrieved by some aspect of procedure to make representations to the Select Committee on Procedure. I believe that it has been considering this matter of Questions quite recently.

PRICES AND INCOMES POLICY

The First Secretary of State and Secretary of State for Economic Affairs (Mr. Michael Stewart): With your permission, Mr. Speaker, I wish to make a statement on prices and incomes policy.
As I explained to the House on 22nd March, the Government are determined to work for an effective policy for productivity, prices and incomes on a voluntary basis, and they attach great importance to the rôle of the Confederation of British Industry and the Trades Union Congress in making such a policy successful.
The wide powers taken in Part IV of the Prices and Incomes Act in support of the standstill and severe restraint will lapse on 11th August, 1967, and will not be renewed. The Government consider, however, that it is necessary to have some more limited powers available during the period of transition in which we are seeking to establish an effective voluntary policy.
As announced in the White Paper published on 22nd March (Cmnd. 3235), we propose to activate Part II of the Prices and Incomes Act, which provides for advance notification of proposed increases in prices or pay and for temporary standstills in appropriate cases during which proposed increases are examined by the National Board for Prices and Incomes.
In addition, the Government propose to introduce a short Bill designed to facilitate a smooth progress from the standstill and Part IV to observance of the principles set out in the White Paper (Cmnd. 3235). This will give the Government powers, exercisable for a further period of 12 months, to lengthen the period of standstill on prices or pay under Part II, in cases iii which this is recommended by the National Board for Prices and Incomes, to a maximum of six months from the date of the reference to the Board, and, in addition, to secure the temporary suspension of price or pay increases which are implemented before it is possible to make a reference to the Board.
Since the Government intend to rely on the voluntary principle, so far as possible, the power to secure temporary suspensions of price or pay increases is


needed in order to ensure that those who are co-operating in the voluntary notification and standstill arrangements are not placed at a disadvantage compared with those who refuse to do so. The extension of the maximum period of deferment to six months after a reference has been made will help to ensure that the parties before proceeding to implement any increases in prices or incomes, pay full regard to the Board's findings and recommendations in the national interest.
The new powers which will replace Part IV will, therefore, be strictly limited, of temporary duration, and specifically designed to support and encourage the voluntary principle within a framework of reference to and examination by the National Board for Prices and Incomes.
The Government are confident that they can Look to the nation to support the policy of moderation in prices and incomes which is essential for our future prospects of securing sound economic growth based on full employment and a strong balance of payments.

Mr. Iain Macleod: Is the First Secretary aware that on this side of the House, and indeed on his own, there was strong opposition not only to Part IV, but also to Part and that it follows that we shall do everything that we can to oppose the extended powers and the introduction of Part II, which he has announced this afternoon? Is he further aware that the pledges of the withdrawal of compulsory power are now shown to be a sham, as we always expected would be the case, in the light of the statement which has just been made to the House?
May I ask the right hon. Gentleman, briefly, some purely elucidatory questions? I think that I have them right, but they are very important to the House.
First, does this mean that the new Bill will lapse in one year? If so, from what date? From today? From the introduction of the Bill? Or from the Royal Assent?
Secondly—and this is very important—when it lapses will all the measures in the pipeline lapse, too? If not, he is taking powers for 18 months and not for 12.
Thirdly, am I right in thinking that Part II, which is to be reactivated, provides a maximum delay of four months

—that is to say, one month plus three; and that the four months now goes up to seven, or one month plus six?
Lastly, may I ask the right hon. Gentleman whether all the Orders made under the new Bill will be subject to negative Resolution of the House of Commons?

Mr. Stewart: I think that the right hon. Gentleman and his hon. and right hon. Friends must themselves consider what attitude they will take to the proposed legislation, but in doing so they should consider this question. We now have very wide powers, and it is reasonable to ask whether it is right to move immediately from a situation of the powers which now exist to no powers at all. What, in fact, is proposed is an intermediate stage of powers severely limited and of a temporary duration. I think that this needs more consideration than the right hon. Gentleman has so far given it.
It is the case that the Bill will lapse in one year, but an Order made under it could continue in force for the maximum period of one plus six months for which it was made. The reason is that otherwise the incidence of the Order might prove very unequal and unfair in comparing cases where an Order was made early in the 12 months period and cases where an Order was made later.
It is also correct that the nature of the alteration is that whereas, under Part II, to put it briefly, it is one month plus three, it will now be one month plus six. It would be the case that the Order would be subject to the negative Resolution procedure.

Mr. Macleod: May I put this briefly? First, on the third point which he made, the right hon. Gentleman must be aware that in the White Paper which he laid recently before the House he made it clear that both the C.B.I. and the T.U.C. asked him neither to activate Part II nor to take further reserve powers. He is going against the advice, therefore, of both those bodies, and we support the attitude that they take.
Secondly, it is now quite clear that this is an extension not for 12 months, but for 18 months. This was made quite clear in his answer.
Finally, new powers of recommendation of standstill, by this proposal and by


the legislation which will be before the House, are to be given to the National Board for Prices and Incomes. Is the First Secretary aware that in the view of the House the Board is simply not able to shoulder the load which will be put upon it by this legislation and that this will be reflected in the attitude which we shall take to the Orders which will come before the House?

Mr. Stewart: When the right hon. Gentleman says 18 months I think that he is adding together two things which are not in the same category. It would not be possible under any Order or under these powers to delay an increase for more than six months at any time. The purpose of the arrangement that the Order can continue after the powers have lapsed is to see that the six months' power of delay does not operate unequally in one case or another.
The right hon. Gentleman mentioned the attitude of the C.B.I. and the T.U.C. I think that it is right in a matter such as this that the Government should consult the interests concerned and, indeed, be prepared to modify their views in the light of what is said during the course of the consultations, but I do not think that any Government would put themselves in the position of saying that they would not legislate except with agreement.
The decision which we have made about the right amount of powers was made after taking into account very carefully what was said to us in our consultations and also taking into account the economic situation and the Government's responsibilities towards it.

Mr. Shinwell: Is my right hon. Friend aware that unless the Government decide to modify their policy towards two particular categories, which I shall name if I may, they are likely to encounter substantial difficulty on this side of the House? May I direct his attention to those two categories—first of all, the deplorable plight of the lower-paid workers, who apparently are to obtain no redress, from the statement which he has just made, and, secondly, some further drastic action with regard to the price level?
Is my right hon. Friend aware that in spite of statements made by some of his colleagues quite recently—including a

Minister sitting beside him—about price levels at present, the situation does not appeal to housewives, who have a better understanding of it? Will he, therefore, take into consideration as soon as possible the feeling in the country on these two categories and see that the Government modify their policy?

Mr. Stewart: I have taken those points—the position of the lower-paid workers and the movement of prices—very much into consideration, but I think that my right hon. Friend will agree that the more one wants to take them into consideration the stronger is the case for the Government having some measure of powers after the middle of this year.
Particularly with an eye on prices, I think that if we were to move immediately to a position in which the Government had no statutory powers, the position on prices might become very serious indeed. That is one of the points which has weighed with the Government.
My right hon. Friend will also see that in my earlier statement about criteria there is express mention of the position of the lower-paid workers. It is important that in the working out of the policy we are able to give increasing attention to this point, but here again, a complete free-for-all would be one of the most dangerous conditions for the lower-paid workers.

Mr. Hugh Fraser: What steps is the First Secretary taking to increase the staff available to the Prices and Incomes Board? Quite clearly, by July, an enormous demand will be submitted right across the board.

Mr. Stewart: I am in consultation with the Board about this. If it proves necessary to make increases, we shall make them.

Mr. Crawshaw: Will my right hon. Friend bear in mind that we are not prepared to return to a free-for-all which has left us with the lower-paid worker living below the poverty standard? Many of us appreciate that the Government have the guts to put forward unpopular policies for the benefit of the country. May I, however, plead with my right hon. Friend that while we are keeping wages down it is doubly important that we show that prices are kept down? Despite what the Government say, they are not being kept


down. Can my right hon. Friend do something about this?

Mr. Stewart: I draw my hon. Friend's attention to the fact that before we began the operation of Part IV we had gone through a period when the rise in wage rates had been very considerable and the rise in productivity very small. There was, consequently, very great pressure on costs, a pressure tending to drive up prices, but during that period the percentage rise in prices was only half the percentage rise in wages. We started this period, therefore, with a great pressure on prices.
We have been able, partly by voluntary agreement and partly by the fact of the existence of the powers under Part IV, to hold that situation. It would not, however, be possible to hold it, I believe, if we moved over in the middle of this year to a position in which we had no powers at all.

Mr. Emery: Will the right hon. Gentleman say what advice he gives to firms, particularly in commerce, which find that their staff are leaving to take up other jobs because there are no wage increases and which are having to increase the salaries for those jobs to attract people to do the work, often involving an increase which is greater than would have been necessary to keep the original staff?

Mr. Stewart: The hon. Member's question illustrates that one cannot operate a prices and incomes policy on the basis that one will never say "Yes" to any proposal for increase of wage or salary or price. The hon. Member may remember that the point about salaries was dealt with in the White Paper which was issued a little while ago.
One must, I think, accept that there are circumstances in which a claim for an increased price may be justifiable, but we believe that it is necessary that those claims should come under the review of the Board and that there should be, in the last resort, certain statutory powers about them.

Mr. Spriggs: Will my right hon. Friend consider submitting instances of increased rent and rates to the Prices and Incomes Board with reference to the activation of Part II? If not, why not?

Mr. Stewart: We have considered this suggestion and if my hon. Friend wishes I

will look at it again. He will, however, see that it propounds a number of difficulties. If we had simply attempted to hold down the rents of council houses, the result would have been to add an additional burden to the rates. If we had endeavoured to deal with both those situations by greater subvention from the Exchequer, that would have caused a problem of taxation as well. I will look at the suggestion again, but I draw my hon. Friend's attention to the fact that there are great difficulties.

Mr. Richard Wainwright: Will the First Secretary tell the House whether, at the expiry of the now proposed 12 months' special standstill, the original Part II will revert to full force? Will he also confirm that the authorities, by invoking one part of the prices and incomes legislation after another, could, going back to July last, secure a deferment of two and a half years of any particular increase?

Mr. Stewart: The second result is not one which we should want to achieve, or, I think, would be achieved. The position at the end of 12 months from the middle of this year is hypothetical. The nation would have to make its judgment in the light of our experience during that 12 months. My own hope is that the voluntary arrangements—for example, those made by the T.U.C.—will play a very large part and will demonstrate, during those 12 months, that we are achieving the position where we can get a policy of productivity, prices and incomes based on voluntary agreement.

Mr. Molloy: While acknowledging that the principle of a prices and incomes policy was necessary to save the nation from the disaster for which it was heading after the last Tory Administration, may I ask my right hon. Friend whether he will, nevertheless, acknowledge that there is grave bitterness throughout the country because ordinary working people feel that this policy is one-sided? It is efficient in holding down wages, but absolutely inefficient in controlling prices.

Mr. Stewart: The record does not bear out the contention—[HON. MEMBERS: "Nonsense."] The record does not bear out the contention that it is wholly inefficient in holding down prices. If my hon. Friend looks at the movement of costs before we began the standstill and


the movement of prices thereafter, he will see that it is not correct to say that it is wholly inefficient.
My hon. Friend will also notice that during the period of severe restraint increasingly previously deferred commitments about wages are coming into operation, and this will be increasingly so after the middle of this year. Nobody, I think, would dispute—I, certainly not—that the operation of policy since last July has been a difficult and unpopular process. [An HON. MEMBER: "And unfair."] I do not think that it would achieve complete fairness, but I believe that it has been operated with as little unfairness as the extremely difficult circumstances made possible.
Our task now is to proceed, unravelling those injustices and anomalies which inevitably occur from an arbitrary standstill in July, and that, I think, with the help of voluntary co-operation and reserve powers by the Government, we shall be able to do.

Mr. Boyd-Carpenter: How does the right hon. Gentleman reconcile his statement this afternoon that he proposes to take powers to interfere with agreements made between employers and employees with his assurance to me a fortnight ago that he had no such intention? Secondly, can the right hon. Gentleman say definitely that it is the firm intention of the Government, when this proposed legislation lapses, to take no further compulsory powers of any sort or kind?

Mr. Stewart: I have already said, in reply to the hon. Member for Colne Valley (Mr. Richard Wainwright), that the question of 12 months from the middle of this year is hypothetical and that the Government and nation will have to judge what the situation then requires.
In reply to the right hon. Gentleman's first point, I do not understand him. It may be that I unwittingly misunderstood his earlier question. He will, however, remember that at the time of the standstill last July it was necessary to call on employers to break contracts; and it was to that that I understood him to refer. We should not be doing that on this occasion.

Mr. Atkinson: Will my right hon. Friend recognise that we on this side do

not accept his statement on prices? He has said that the Government will legislate on wages only with the agreement of the T.U.C. Is he aware that every major trade union, with the exception of his own union, the National Union of Teachers, and the National Union of General and Municipal Workers, is now on record as being opposed to the introduction of any further legislation in regard to wages?

Mr. Stewart: On the question of prices, I must again ask my hon. Friend to look at the movement of costs before the standstill began and the movement of prices thereafter. If he does that, he will judge the matter rather differently. I did not say that the Government would not legislate without the consent of the trade union movement. I do not think that any Government could say that about any outside body. But we have endeavoured, in deciding what legislative proposals to put before the House, to take as much account as we could of the views of both the T.U.C. and the C.B.I.

Mr. Frederic Harris: When will the Government understand that the continuance of this negative policy is just not acceptable to the working population—[Laughter.] The ignorance of that laughter only shows that right hon. and hon. Gentlemen opposite do not know what is going on in their own factories. The only answer to the problem is to cut Government expenditure, reduce taxation, and restore incentives.

Mr. Stewart: If, when the hon. Gentleman talks of cutting taxation, he has in mind substantial reductions in the social services as well, that will not be welcome to the people for whom he claims to speak, either, and would also affect considerably the nature and volume of wage claims.
As to this being a negative policy, it is true that, during the period since July, we have had to operate the prices and incomes policy in terms of standstill and restraint. But these are not the permanent characteristics of the prices and incomes policy. I believe that the permanent principle, that the growth in money incomes and in prices ought to be geared to the growth of real wealth, is increasingly understood and accepted.

Mrs. Lena Jeger: Is my right hon. Friend aware that this question of price levels is very unconvincing, especially to the ordinary housewife, because the cost-of-living index is based on a wide range of goods, the purchase of many of which plays no part in the budgets of the lowest-paid workers? When, for instance, the price of milk goes up, or when council house rents go up, there is a disproportionate increase in the cost of living of the poorest worker, whatever his average is stated to be.

Mr. Stewart: I know that the index number of retail prices can only be an average figure and that movements in it affect different groups of people differently. My hon. Friend refers, for example, to the price of milk. If we had had no statutory powers during this period, that rise would have been earlier and larger.

Mr. R. Carr: Will the First Secretary now answer the question put to him by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), about exactly when this new 12-month period begins and ends? Will he give us some idea when the Bill is to be introduced and give us an absolute assurance that this year, unlike last year, the House will be given a reasonable opportunity to debate it?

Mr. Stewart: It will be introduced in a few weeks, I should have thought. It will be a short Bill, and there should be no difficulty about giving the House a reasonable time to debate it. I cannot state an exact date for its coming into force. That has to be linked with the timing of the expiry of Part IV, which could either expire on 11th August, which is the latest date, or could be revoked earlier. If we think in terms of the middle of this year, I think that we shall be about right.

Mr. Manuel: As one who has supported the prices and incomes policy, may I ask my right hon. Friend whether he is fully aware of the intense feeling about prices in the country? Is he further aware that although he and his right hon. Friends may secure agreement with a manufacturers' organisation, that agreement is not being carried down to shop floor level? Adequate proof can be given in Scotland, at any rate, of a vast divergence in prices for the same commodities.

Mr. Stewart: I am very much aware of the sheer fact that a period when wages rise faster than prices is an agreeable period, and one when the reverse happens is a disagreeable period. During this time, although the rise in prices has not been large, it has been larger than the increase in wages. That has been one of the difficulties of the period. The situation would have been very much worse if there had not been the existence of statutory powers. This is one of the main considerations in the Government's minds in making their present proposals.

Mr. Edward M. Taylor: How can the Minister justify the continuance of a policy which, in Scotland, has resulted in coal, gas, electricity and other essentials going up in price more than in the rest of the country, while electricians, local government officers and others have been deprived of wage increases which have been paid in England? How does this make sense, and how will the new policy sort it out?

Mr. Stewart: I would draw the hon. Gentleman's attention to the fact that, although we have had first a period of standstill and then a period of severe restraint about wages, we are now moving to the period where deferred commitments about wages are coming into operation. When I made the earlier statement, I drew the attention of the House to the extent of probable wage increases in the latter part of this year. This is a welcome thing if it does not outstrip the growth of real wealth. We have to keep these things in proportion.

Mr. Wellbeloved: Will my right hon. Friend make it clear that the activation of Part II of the Act and the moderate extension of compulsory powers will be used vigorously to deal with the scandalous increases taking place in prices at the retail shop level? Will he also take note of the fact that the massive abstention of labour supporters during the recent elections is a clearer indication of what is happening about prices than the figures which his Ministry has?

Mr. Stewart: We have to look at facts and at economic reality in these matters. In the first part of his question, my hon. Friend was asking for very much wider and more sweeping powers than the Government are prepared to take or


believe that it would be wise to take. Without at least the kind of powers here proposed, it would be impossible to produce anything like the result which he has in mind.

Mr. Mawby: Is the right hon. Gentleman aware that his interpretation of "voluntary basis" is the language of a sergeant-major in terms of the statement which he has just made? Secondly, when he points out that we cannot suddenly move from restraint to complete freedom, surely that was known in July last year, when we went through the original Bill. This provision could have been put into the original Bill. Does that not show that the Government are certainly not now, if ever they were, masters of events, but are rather tending to deal with events as they meet them?

Mr. Stewart: No. On so important a question, with all its constitutional implications of the use of powers in this field, it was right last July not to take powers for longer than 12 months. This is something about which one needs successive judgments and does not attempt to foretell the future more than is reasonably possible to be able to do.
I do not accept, either, what the hon. Gentleman says about the concept of the voluntary principle. Even during the period when Part IV has been in operation, the whole thing has worked far more by voluntary arrangement on both sides than by the existence of Part IV.
The point which we are making, however, is that when there are a great many people, both trade unionists and manufacturers, who are prepared to work the voluntary principle, they ought not to be put at a disadvantage by the minority who are not. That is the only function of the powers.

Mr. Maudling: The right hon. Gentleman referred to his recent estimate of the upward movement of incomes in the latter half of this year. Has this estimate been affected by the measures which he has announced today? What is his current estimate of the increase in money incomes during the course of the current financial year?

Mr. Stewart: I do not at this stage want to go further on that than I said previously because it would take me rather outside the scope of this statement. What I said then was that mainly, though not wholly, as a result of already known commitments which had not been brought into operation we could expect a 6 per cent. increase or thereabouts in wage rates in the latter part of this year.

Mr. Heffer: Would not my right hon. Friend agree that there are much deeper implications to the proposals that he made this afternoon? The Trades Union Congress has made it clear that it does not want to see the activation of Part II of the Act. Is my right hon. Friend not aware that this is likely to lead to a growth of industrial conflict which can do far more harm to the economy than the abandoning of the policy which he has outlined today.

Mr. Stewart: No, I do not believe that that is so. If my hon. Friend looks at what was said at the T.U.C. conference of executives he will see that it is clear that although they were not in agreement with the Government on the question of powers they were resolved, none the less, to carry out to the full their own part in securing voluntary arrangements about wage increases.

Several Hon. Members: rose—

Mr. Speaker: Order. We must proceed.

WAYS AND MEANS

Considered in Committee [Progress, 13th April].

[Sir ERIC FLETCHER in the Chair]

AMENDMENT OF THE LAW

Question again proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making—

(1) amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description, or for all goods to which any of the several rates of tax at present applies;

(2) amendments of the enactments relating to selective employment tax so as to give relief from tax—

(a) by way of exemption from, or a reduction in the rate of, tax except in respect of all persons of the same descriptions relevant for determining the rate of the employer's flat-rate contribution with which the tax is combined, whether that contribution is under the National Insurance Acts or under the corresponding enactments in Northern Ireland; or
(b) by way of providing for payments to employers of an amount equal to the whole or a specified part of the tax paid if the proposed provision—

(i) is in respect of employers in part only of Great Britain, unless it is in respect of all employers not already entitled to such payments in a part of Great Britain which is included in the areas specified as development areas under section 15(2) of the Industrial Development Act 1966; or
(ii) extends to employers in Northern Ireland; or
(iii) is in respect of all persons in any particular description of employment in all parts of Great Britain, and relief in respect of the whole of the tax paid could be given in respect of that description of employment by an order under section 9(1)(a) of the Selective Employment Payments Act 1966 adding that description of employment to the employments to which section 1 or 2 of that Act applies; or

(c) by adding or removing any employer to or from the employers to whom section 3 of that Act applies; or
(d) by amending the provisions of Schedule 1 or Schedule 2 to that Act;

(3) amendments of the Land Commission Act 1967.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

4.12 p.m.

The President of the Board of Trade (Mr. Douglas Jay): Whatever may be thought about the prices and incomes policy and this country's economic performance generally during recent years, I think that the Committee and the country, and, above all, British industry, can congratulate themselves on the export effort made since 1964. Between 1964 and 1966 the increase in exports actually exceeded the total cut in the overall balance of payments deficit. The deficit was cut by £572 million between the two years, and the increase in exports was £631 million. Incidentally, the Leader of the Opposition was quite wrong in suggesting in his speech immediately following the Chancellor last Tuesday that the recovery in the balance of payments was partly due to a decrease in imports. In fact, there was no decrease in imports in either 1965 or 1966, but a slight increase in both years.
Export promotion has been one of the main jobs of the Board of Trade during this period—one to which we have given top priority—and a new programme of export services and incentives was launched at the end of 1964 and in the early months of 1965, I said then that these measures were experimental, that we would intensify those which proved most successful, and adopt any further practical measures which could be devised or, indeed, were suggested by anyone.
Over the period, among many other schemes introduced, we have repeatedly extended E.C.G.D. facilities, with lower premium rates, wider and longer cover, and lower interest rates offered by the banks; we have introduced the Export Rebate; expanded the British National Export Council on a large scale; offered larger Government support of all kinds for a much more ambitious programme of Exhibitions, British Weeks and store promotions all over the world, and for a rising number of export missions; and greatly improved the services offered by our commercial officers abroad. Practical experience of these two years has shown that all these major advances have been successful, and are increasingly valued by a large number of our exporting firms.
On the export front, assistance, I believe, is much more valuable than exhortation and I think the House would rather have facts than exhortation today. The export rebate is now being paid to firms at a rate of £1¾ million a week. E.C.G.D., in the first 11 months of the last financial year, covered £1,507 million of export business, compared with £1,337 million in those months of the previous year. This £1,507 million included contracts such as a £28 million aluminium plant for Norway, and four projects for Russia together totalling over £13 million. In 1966, incidentally, British shipbuilders won 17 contracts worth more that £44 million for which E.C.G.D. financial guarantees were promised. Though there are still complaints, and always will be, a growing number of tributes have been reaching me from exporters to the help given by E.C.G.D. and also our commercial officers abroad, as well as our other export services at home.
There is general argeement, also, that the export mission programme, both inward and outward, has been one of the most effective forms of export promotion, since it gets buyers and sellers into direct contact and British salesmen into the countries and cities overseas where the goods have to be sold. Altogether, 191 missions and market research schemes overseas received grants in 1966, compared with 104 in 1965. We expect to organise many more in 1967. The still mounting programme of British Weeks and exhibitions has also, by common consent, proved effective. In 1966, altogether the Board of Trade supported 155 overseas trade shows and 188 store promotions. This was twice as many as in 1965; and, here again, we expect to support 200 trade shows and 270 store promotions in 1967.
We shall concentrate particularly on Canada this year, which is, of course, Canada's centenary year. Our trade deficit with her, though cut by £62 million in the last two years, is still too large; and we are planning three major commercial events, in addition to the British Pavilion for Expo '67 at Montreal. These three will be British exhibits in the Toronto National Production Show, and the British Columbia Trade Fair in Vancouver next month, and a full-scale British Week in Toronto in October.
We intend to continue steadily improving E.C.G.D. services to exporters. I can now announce two further improvements. First, E.C.G.D. expects shortly to introduce a scheme whereby the banks under cover of the E.C.G.D. guarantee will advance funds to exporters at Bank Rate, with a minimum of 4½ per cent., for the purpose of financing export transactions on short-term credit unsecured by buyers' bills or notes. With the addition of this scheme, E.C.G.D.'s system of guarantees to banks will be available to support almost all guaranteed short and medium term export credit.
Secondly, to encourage our exports to Israel, where there are special problems, I worked out a new arrangement with Mr. Sharef, the Israeli Minister of Commerce, in London last week. E.C.G.D. has guaranteed a credit of £5 million from a London bank to the Industrial Development Bank of Israel to be spent on British exports of capital plant and machinery of £¼ million or more each, on 10-year credit terms, or alternatively for project and bulk purchases of plant and machinery of not less than £100,000, on seven-year credit terms. This will be of great help in exporting to Israel's rapidly expanding market.
We have also, of course, greatly improved our arrangements for providing credit terms for the export of aircraft, and the recent £4 million sale of 10 HS748 aircraft to Brazil, with the help of E.C.G.D., shows that we can sell turboprop aircraft as well as jets in competition overseas.
One of the most encouraging export performances last year was that of the aircraft industry in reaching the all-time record figure for exports of £201 million—not yet as large as the £743 million exported last year by the motor vehicle industry, but a big improvement all the same. On aircraft, I may add that my noble Friend the Minister of State, Lord Brown, left London yesterday for New Zealand to discuss the sale of the already successful BAC111 to the New Zealand National Airways Corporation, in the face of some quite fierce competition.
Our exports of capital goods rose by £242 million between 1964 and 1966—an increase of 20 per cent. There are still, however, large potentialities for major capital projects in which several


or many firms combine, often by organising a special consortium, to bid for overseas contracts—civil engineering, for instance. Some evidence suggests that we have not yet been as successful as our competitors in organising such consortia, whether of private or nationalised enterprise, or both, and in mobilising financial and consultancy services to work with them.
I am glad to be able to tell the Committee that Lord Cromer, at my request, has agreed to initiate a systematic inquiry into the best way of ensuring that we have the most effective organisation possible, both inside and outside the Government, to prospect for and execute these large important capital projects. I am also consulting other Government Departments and, through them, the nationalised industries, to ensure the maximum use of their knowledge and experience in carrying out such projects.
In all this export promotion campaign, quite apart from the responsibility of industry itself—which, clearly, must always be the mainspring—we have had invaluable help from many hundreds of business people who, through the British National Export Council and its area committees, and in other ways, have given their services voluntarily to the export campaign.
I know that the right hon. Member for Wolverhampton, South-West (Mr. Powell), who sits occasionally on the Opposition Front Bench, but is not there today, disapproves of these voluntary exertions, and has made at least two speeches in this sense, whose only effect—if any—would have been to hamper the national exporting effort. "The whole thing", he said, "is absurd". The results show that the right hon. Gentleman, happily, has had no success with this campaign. During the four months up to the end of March this year our exports were actually 19 per cent. higher than during the last four months of 1964. This 19 per cent. rise would mean an increase, at an annual rate, of nearly £900 million. As a result of all these efforts, the monthly trade deficit over the past four months averaged only £7 million, or less than one-quarter of the monthly deficit in 1964.
Another way to measure our success over the longer-term period is to point

out that before 1939 we paid for about two-thirds of our visible imports with visible exports; in 1964, this proportion was about 90 per cent.; in 1966, it was 97 per cent.; and during the past three months, 99 per cent. We are now exporting nearly twice as much per head of population as the United States, and nearly four times as much as Japan.
The rise in our sales to the United States alone between 1964 and 1966, by 54 per cent., was a remarkable performance, although I am certain that there is still tremendous scope for exploiting the opportunities of this market. To Japan, our exports increased last year by 28 per cent., following the British Exhibition in Tokyo in the autumn of 1965—this will be of interest to people who talk so much about the imports that we take from Japan and sometimes forget our increasing exports—and to the Soviet Union and Eastern Europe by 29 per cent., in the one year, 1966.
I expect a further rise in sales in Russia and Eastern Europe this year, but we are still far from satisfied with the rate of Soviet purchases from the United Kingdom, which are a long way below our purchases from the Soviet Union. We very much welcome the increased orders placed for British consumer goods, including textiles—amounting altogether to over £9 million—by the Soviet authorities since Mr. Kosygin's visit in February, and this Friday I shall start a week's talks with the Soviet Trade Minister, Mr. Patolichev, here in London, designed to step up trade further and narrow the gap, and make progress towards a longer-term trade agreement. We have also established an Eastern European Trade Council this year to stimulate the expansion of our exports, to the Eastern bloc generally.
The Leader of the Opposition said on Budget day that
the increase in exports over the last two years has been only slightly greater than the increase in the preceding two years"—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 1025.]
The right hon. Gentleman admitted that it was greater. What he did not say, however, was that the rate of increase of world trade has itself slowed down since 1964. The facts are that in 1964 world exports of manufactures rose to a peak rate of increase of 15 per cent. and


United Kingdom exports grew by only 5·6 per cent., but in 1965 world exports rose only 11½ per cent., whereas United Kingdom exports by 8·2 per cent—and last year, 1966, world exports rose by an estimated 12 per cent., and our exports by 6·9 per cent., even after some loss due to the seamen's strike.
Although our export performance during recent months has been so promising, nobody, I hope, will assume that we have overcome all our difficulties as easily as that. Every exporter knows that there are huge difficulties and constant changes of fortune. As the Chancellor said, the prospect for expanding world trade is good, but it is always uncertain, and although the present international movement towards lower interest rates should help any slackening of activity in the United States or Germany would mean harder going.
It should be at least one advantage to the United Kingdom that world imports of manufactured goods are growing faster than world trade generally. Over the 10 years up to 1965 the value of manufactured imports into West Germany, France, Italy and Japan—our main competitors—rose by more than 15 per cent. a year, which was a good deal faster than the rate of manufactured imports into either the United Kingdom or the United States. E.F.T.A. now also offers us a duty-free market of 100 million people with the highest purchasing power in the world outside North America.
Far the greatest break-through, however, from the point of view of ourselves and the world as a whole, would be a successful and substantial agreement in the Kennedy Round negotiations during the next few weeks. This is the most ambitious attempt ever made in the history of the world to reduce barriers to trade generally. The total imports of the countries taking part in the Kennedy Round negotiations are over £50,000 million a year, which is three times the total of all E.E.C. imports and four-and-a-half times those of E.F.T.A.
We, as a Government, are doing our utmost to secure a result on time in the Kennedy Round negotiations—that is to say, by May of this year. I am confident that with reasonable give and take all round a settlement that would be of enormous benefit to the trading world, in-

cluding the developing countries, affecting industry and agriculture, is within our grasp. The next few weeks are likely to be crucial. World trade has nearly doubled in volume over the last 10 years—which fact is not always appreciated—and if the Kennedy Round succeeds it can grow even more quickly during the next 10 years.
Despite the growth of exports and world trade, two main anxieties have very naturally been expressed by hon. Members in the past few days in this debate; first, about unemployment in the development areas and second about the prospects for the general growth of our economy. Clearly the squeeze of the past year has affected the development areas and caused an absolute rise in unemployment. But, in judging the success of the special measures launched to help those areas over the past two years, hon. Members should remember two facts which sometimes get overlooked.
First, there has been a large and rapid decline in coalmining employment in these areas which we have had to compensate with new work in order even to maintain employment where it was. Second, the rise in unemployment over the past year has been markedly less in the development areas than in the country generally. Employment in the coal mines has declined by 11,230 in Scotland since April, 1964, by 24,000 in the North East, and by 18,380 in Wales. That is a total drop of 54,000 which it has been our policy to make good, and which we have largely succeeded in doing.
When the right hon. Member for Enfield, West (Mr. Iain Macleod) said last Wednesday that he could not
see the slightest real evidence that development areas have been faring, or will fare, better this time."—[OFFICIAL REPORT, 12th April, 1967; Vol. 744, c. 1215.]
this was, I am afraid, because he was not looking very carefully for it. At any rate, the figures—the right hon. Gentleman gave none—are as follows. From March, 1966 to March, 1967—I take the figures right up to now and not for the first period of the last 12 months—unemployment in Great Britain rose by 81 per cent., in London and the South-East by 90 per cent., and in the Midlands by nearly 200 per cent. But in the development areas it rose in the northern area


only 55 per cent., in Merseyside 47 per cent., in Scotland 45 per cent., in Wales 40 per cent. and in the South-West 33 per cent. That is a marked difference. Employment in these development areas—the right hon. Gentleman did not fully recognise this—are, of course, being increasingly diversified with consumer as well as capital goods industries.
This Change for the better in the relative fortunes of the development areas has been eminently due, I think, to the far greater share of industrial development out of the national total which they have enjoyed in the past two years—

Mr. Iain Macleod: Is the right hon. Gentleman using figures of wholly unemployed, in which case his figures may have some meaning, or is he using figures of the total employed, which includes the temporarily stopped, which mould make his figures absolutely meaningless?

Mr. Jay: I am using the figures of total unemployed, which is the only fair way of judging the situation. If the right hon. Gentleman quotes the figures of temporarily unemployed, all his argument means is that there was a temporary rise in the Midlands, which has now happily been reduced, which is what we should like to see.
This change, I think, is due to the far greater share of industrial development—the right hon. Gentleman would not dispute this—which the development areas have enjoyed in the past few years. This is now taking effect and we intend to take it up. I give these figures because the right hon. Gentleman gave none.
The percentage going to development areas of new industrial building by square feet out of the national total rose from 24·4 per cent. in 1962 to 39·7 per cent. in 1965 and 41·4 per cent. in 1966. At the same time, the share going to London and the South-East fell from 32 per cent. in 1962 to 15 per cent. in 1966. Wales, which was particularly neglected because of the wholesale descheduling by the previous Government and where there is a longer leeway to make up, has enjoyed a particularly dramatic increase in its share from only 4 per cent. in 1963 to 13 per cent. in 1966. In 1966, Wales actually got a higher share than the West Mid-

lands, though the population is far different.
Also, it is not fully realised how great the absolute increase has been in I.D.C. approvals for new industrial building in the development area regions in the last two years. If the right hon. Gentleman thinks that percentages are deceptive, I will give the absolute figures. The total new building in square feet. has risen in Scotland from 11,010,000 in the two and quarter years before October, 1964 to 20,852,000 in the two and a quarter years since, in Wales from 5,287,000 to 14,447,000 and in the northern region from 11,429,000 to 17,124,000. The total rise in the development areas between the two periods was 91 per cent. and only a small part of this increase is due to a change in the I.D.C. system and definitions—

Mr. Reginald Maudling: In view of the time which elapses between a decision to invest in a new factory, with the application for an I.D.C., and building the factory, what proportion of this new factory building was decided upon when the incentives available were those installed by the previous Government?

Mr. Jay: I am giving the I.D.C. approvals under the present Government, and what is particularly notable here is that, because of the descheduling of most of South Wales by the previous Government, there was a greater time lag here than in the other areas.
This expansion is bound to tell in time, as these factories are completed and build up their labour force. In the greater part of Lancashire also, quite apart from the Merseyside development area, we follow a very easy I.D.C. policy. Those who imagine that Lancashire has been neglected will be interested, and, I hope, even pleased to hear that total I.D.C. approvals in square feet in the north-western region rose from 13,231,000 to 20,550,000 square feet between the same two periods.
The Board of Trade's own factory building programme in development areas is only a part, though a large part, of the total factory building effort, actually about a third in the development areas as a whole—

Mr. Charles Fletcher-Cooke: When the right hon. Gentleman speaks of Lancashire, as these figures include the Merseyside development area, could he


break them down between the development area and the non-development part of the region?

Mr. Jay: It makes little difference to the total figure, because employment in the Merseyside area is a small proportion of the total. I will give the hon. and learned Gentleman the figures and he will find that the unemployment percentage has moved favourably in the Merseyside development area in the last two years—almost more favourably than in any other part of the country—[Interruption.] The hon. Member for Ormskirk (Sir D. Glover) does not, I think, actually represent a cotton area.
I was saying that the Board of Trade's own factory building programme is only about a third of the volume of total factory building in the development areas and I am sure that hon. Members opposite will be glad to recognise that private enterprise plays a major part in the whole operation.
This total of Board of Trade building—the advance factory programme, which has attracted a great deal of notice—is again only about one-third that of private factory building. Therefore, it is only roughly one-ninth of the whole industrial development going on. The value of the advance factories, I think, has been the chance which they give the Government to locate them ourselves precisely where they are most needed, notably in the contracting coal mining areas.
Altogether, 94 advance factories have been included in the four programmes launched since 1964, of which 59 are in coal mining areas. Of those 94, so far 32 have been completed, another 36 are now building and 23 have already been allocated to firms. The demand from firms for these has not dried up in the last few months to the extent that some people feared. Indeed, there is some value in having a little unallocated space at any given moment because a firm which wants a factory immediately can then be accommodated, and this is one of the advantages of advance building. For example, Ford's went to Swansea and Plessey to South Shields because there were large modern factories immediately available.

Mr. David Gibson-Watt: Could the right hon. Gentleman give the

Welsh figures of advance factories and say how many of these have been taken up and how many people are now employed in them?

Mr. Jay: I have given figures for factories for the whole of the country and I assure the hon. Gentleman that the Welsh figures are not dissimilar. A higher proportion of building exists than building completed, but that is because of the delay caused by the failure of the former Conservative Government to reschedule the area in good time. However, we are overcoming that difficulty and progress is going well.
As I was saying, it is desirable to have some factories immediately available. Nevertheless, at the moment as much as 98·5 per cent. of all Board of Trade owned factory space in development areas is occupied. We are also buying more land, clearing industrial sites and developing many new industrial estates—notably at Llantrisant, Tees-side, Kirkby and Bellshill. Capital expenditure on all this will be at record levels this year; and total industrial building—private and public in the development areas—is now going on in these areas at a greater rate than ever before.
I have also received increasing reports lately that the 45 per cent. investment grant is proving a powerful attraction for firms to extend in development areas, and I repeat today that both this and the 25 per cent. grant in the rest of the country are available only from 1967 to 1968 and will, after that, revert to 40 per cent. and 20 per cent. respectively. We have succeeded in organising the investment grant machinery quickly enough to handle the applications coming forward and we shall start making payments this month, instead of in July, as we promised both in development areas and outside. This meets a particularly pressing demand from industry to help in accelerating their investment plans.
Whichever way one looks at it, therefore, there is no doubt that a great deal has been done to strengthen the development areas. But certainly the whole effort must be both sustained and intensified before the acute unbalance inherited from the past is wholly overcome.
Anxieties have also been expressed in the debate about whether the economy as a whole will really expand this year as


fast as the Chancellor forecast, or as fast as our capacity permits. The quicker exports expand, of course, the faster general growth will be possible. That is why the export effort must remain the first priority in all our policies. But I doubt if enough allowance is being made in current forecasts for the increase in public sector investment and public expenditure and its effect in expanding demand generally.
Fixed investment by the public sector is expected to rise by 8½ per cent. in real terms this year. It is true that public sector current spending on goods and services—after omitting American aircraft—will rise by only 2½ per cent. in real terms. But if current spending and fixed investment by the whole public sector are included—again, omitting American aircraft—the total rise is estimated at 5 per cent. in real terms—a very powerful upward pressure—additional to rising exports on production, employment and investment at home.
Some hon. Members seem to have forgotten that public investment and public expenditure generally, by sustaining demand, exert as much indirect effect as exports or consumer buying in stimulating private investment also, particularly in a year when there has been no increase in taxation. The right hon. Gentleman the Member for Leeds, North East (Sir K. Joseph), in his speech last week, did not seem to understand this at all.
The Chancellor's decision this year not to increase taxation to cover the rise in capital and current expenditure by the public sector must, in itself, tend towards expansion. In addition, two of the public industries which have the biggest investment programmes, electricity and gas, must themselves grow rapidly if manufacturing industry and exports are also to grow.
It is also true, as the Chancellor said—and this must be remembered in all our policies—that if we are to manage a mixed economy successfully and try to maintain private investment, a fair rate of profits must be preserved as well as fair rates of wages and salaries. This is accepted in our incomes and prices policy. My right hon. Friend the First Secretary said this this afternoon.
I hope that the present Companies Bill—which is making steady, if not notably

rapid, progress in Committee—with its far-reaching proposals for greater disclosure—supported, I think, by virtually all hon. Members—will also encourage more discriminating private investment. It should also help competition which the right hon. Gentleman the Member for Leeds, North East is rightly keen to foster.
Anxieties have also been expressed at Question Time, at other times in the House and in the Press about the Government's powers to prevent company fraud. In the case of insurance companies, the present Bill includes drastic new powers. I have not been satisfied, however, with the rate at which the Government and the legal machine can at present cope with the most serious and complex cases of company fraud generally. Steps have already been taken to strengthen the expert staff needed to handle this and these will have to be intensified. After consultations with the Home Secretary and the Attorney General, it has also been decided to co-ordinate more closely the machinery of all the Departments responsible for handling fraud cases.
I now intend, in addition to this, to propose Amendments to the present Companies Bill so as to give the Board of Trade in future much more effective powers of investigation into suspected company fraud generally, and not just in the field of insurance and deposit taking. Essentially, under these powers—which I will not describe in detail today—Board of Trade investigators, wherever this seems necessary to the Department, would be able to require a company to produce for them any books or papers which they may demand and to require any person to give an explanation of these books and papers, After reviewing the matter, I believe this is the most practical method of getting quicker action. As this issue is, by common agreement, evidently urgent, I propose to put down new Clauses for this purpose during the Committee stage. The Board of Trade will, in the meantime, set out to secure the additional legal and investigating staff that will be required, but I cannot pretend that this will be done either easily or quickly, for expert staff of this type is in short supply.
Very few hon. Members have seriously argued, whatever their complaints, that


the Chancellor should have made substantial net cuts in taxation before a balance of payments surplus had been achieved. Nor have they questioned the Government's policy of giving priority, in reflation, to exports, investment and the strengthening of the development areas. We have, when all is said and done, already reduced the external deficit by nearly £600 million since 1964; we have repaid substantial debts and restored the £ to parity. The path straight back to 1964 would certainly be easy, and paved, no doubt, both with primroses and good intentions. But on any farsighted view, nothing, in our judgment, could now be more foolish than to throw away the gains of the past year before a secure foundation for steady and sustainable growth has been built up.

4.50 p.m.

Mrs. Margaret Thatcher: The speeches of the President of the Board of Trade usually make better reading than they do listening, because he tends to obscure the issues by such a welter of statistics which I often think confuse the issue rather than clarify it. We note his remarks about exports. I think that the excellent export performance of British industry in 1965 was due to the excellent order intake for 1964. I am always a little wary when politicians tend to take too much credit for the export performance of industry. Frequently, what happens is that industry carries on despite the efforts of politicians and, in exports, makes an extremely good job of it.
I noted that the President of the Board of Trade did not refer to this month's trade figures which, on the face of it, were a little disappointing, though I agree that one should not draw too many conclusions from them at the present time. He said that world trade prospects were good, but uncertain. How they can be both good and uncertain at the same time, I am not quite sure, but this is one of the rigmaroles. I feel certain that the right hon. Gentleman looked with special interest at the economic articles in The Times, and that he noted that one Peter Jay said that the Treasury tends to overestimate the future export performance of British industry. Parents can learn so very much from their children these days, can they not?
I turn to one or two items in the speech of the Chancellor of the Exchequer. He described the British situation as now having come out of the "valley of gloom". We now know where we have been for the last two and a half years. But the point is that when we were going into this valley, the Chancellor of the Exchequer said that his steering wheel was the National Plan. In a television performance on 6th April, 1965, he said:
It is a remarkable job. That is going to be the steering wheel of which my Budget is the cog, and the two things are going to operate together.
At the same time the Leader of the House was describing this valley of gloom as a "dash for freedom." It can scarcely be everything at the same time. However, we now know where we are in a ship that the Chancellor of the Exchequer described. What it is doing coming out of a valley, I do not know, but, at the moment, it appears to be entirely without a rudder.
I should like now to turn my attention to one or two of the Chancellor of the Exchequer's references to incomes. One remark he made struck me as being very significant—significant in that it was remarkable that a Labour Chancellor of the Exchequer should make it at all, or make it in the phrases he used. He said:
The Government are not proposing to make the ordinary worker worse off."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 988.]
Gone are the days when the Government were promising things; today they have to assure workers that they will not make workers worse off.
In this connection, it was remarkable, too, that the President of the Board of Trade should think it a matter for boasting that the rate of unemployment had risen by only some 45 per cent. or 50 per cent. in the development areas in the last year, and that he should use as his reason for the boast that unemployment had risen by some 200 per cent. in some other areas. That did not seem to be a very appropriate use of percentages.
The remark of the Chancellor of the Exchequer that the Government are not proposing to make the workers worse off comes against a background of falling average earnings, but that was not the only message to the people who earn


wages and salaries. The right hon. Gentleman also said:
…If there is a general scramble for substantially higher wages…taxation will have to go up…"—[OFFICIAL, REPORT, 11th April, 1967; Vol 744, c. 987.]
Couple that remark with the statement we heard earlier this afternoon it seems that people can get increased wages and salaries by permission only. If, nevertheless they do manage to get them, the message to all who work is, "If you make it, I'll take it". That is the message of the Chancellor of the Exchequer. We know, too, from what the Government have done that they will not hesitate to make a prices and incomes Order against even a small handful of workers if they think fit so to do.
I turn to the issue of growth. From about 1955 onwards we had an average growth rate under Conservative Governments of 3 per cent. This right hon. Gentlemen opposite bitterly derided at the time as economic stagnation. When the rate of growth increased towards the end of our period of office the present Chancellor of the Exchequer was giving the impression that the then 4 per cent. growth rate could be exceeded by just setting a few targets. On 20th July, 1964, he said:
However, 4 per cent. should be to this nation a base camp and not a mountain peak. It should be the base from which we move forward, we should be aiming in the latter part of the 1960s for a 5 per cent. and then a 6 per cent. growth rate."—[OFFICIAL REPORT, 20th July, 1964; Vol. 699, c. 75.]
Here we are in the latter half of the 1960s—and where are we? There has been virtually no growth, and between the end of 1966 and the end of 1967 we expect between 1 per cent. and 2 per cent, growth.
My right hon. Friends have earlier dealt with the rate of growth the right hon. Gentleman expects this year, and it is still not clear what exactly he meant, because he used two differing sets of figures from different places in different parts of his speech. In any event, the right hon. Gentleman has now set a new goal, and it is 3 per cent.—the very goal he was deriding under a Conservative Government. We must not strive too hard as men and women workers—there will be no merit increases in incomes because of our striving. To strive these days means "Do what the Government tell you—or else".
The Chancellor of the Exchequer used a new phrase about public expenditure. Public expenditure is no longer reduced, or cut down, or even rephased—it is reined back. The use of that word gives the impression that all one has to do is gently bring the reins towards one and expenditure will be reduced comparatively easily, but on 20th July last year the Prime Minister promised us that public investment programmes were to be cut by some £150 million a year during the year 1967–68. In that year, those programmes were to be cut, but the result is that this year there is the biggest increase ever in public expenditure. The reining back that was to operate this year does not appear to have been very effective.
We all know that there are difficulties in reducing public expenditure. The greatest hope for the future is to stop it from rising as fast as national income. That was one of the great achievements of Conservative Government during its period of office. We got the compliment from one of the surveys carried out by French employers that this country was one of the few countries that had not increased the burden of taxation on the people relative to the growth of national income. We know that public expenditure has been increasing extremely fast, and the Government have been busy finding reasonable retrospective explanations for the events that happened.
We were told by the Leader of the House on 23rd November, 1966, that the Government had decided that public expenditure should rise over the period 1964–70 by 4¼ per cent. a year, and that the Government's determination to make sure that the total expenditure rose faster than gross national income was a decision to plan. So we know now that everything that happens under Labour Governments must be the result of a decision to plan—rising unemployment included, presumably.
A final point about reining back public expenditure. I notice that on the current part of public expenditure, which, of course, is also rising this year, the Chancellor deliberately left out of account the money for the purchase of military aircraft because we are being loaned that money this year. This, of course, will have to be paid for in future. It is interesting to see that there is a built-in


increase in current expenditure somewhere in the future, which does not augur very well for it being reined back next year or the year after that. The Chancellor will not look very wise if he has to pay for the aircraft in a year in which other current expenditure is also rising.
I turn to one or two comments about taxation, and first its relation to public expenditure. During the past year the Chancellor has talked a lot about fiscal and monetary mixes in tackling inflation. He has referred to this in relation to other countries as well as our own. We are the first to admit that the Chancellor has used the fiscal weapon to counter demand. Indeed, he has used it very extensively, but the implication of using taxation to reduce demand is that the money so taken in will not then be spent out by the Government. Yet this Government, having imposed increased taxation, have proceeded to spend it. Taxation has led to increasing public expenditure.
The weapon which the Chancellor chose to fight inflation has furthered it through rising public expenditure. Last year we had another bout of increased taxation. This year we have another bout of increased public expenditure. It looks as if this is what happens under Labour Governments—increased taxation, increased public expenditure, increased taxation, increased public expenditure once again. This year is supposed to be a mildly reflationary year, but in fact extra taxes are being taken, a fact which some seemed to have missed.
The Chief Secretary will remember the reason given last year for fixing Corporation Tax at 40 per cent. It was because the Chancellor would get only 11 months' tax in during the year and also because of the one-year surplus. The one-year surplus has terminated and this year he will get 12 months' tax in. If his reason was right last year, Corporation Tax ought to be reduced to 35 per cent. this year to take in the same amount but, not a bit of it; it is still 40 per cent. The figures are obscured by the changed methods of calculating investment grants, but the Chancellor has about £100 million extra Corporation Tax by this obscured increase in taxation.
He is also consolidating the regulator and transforming a temporary tax into

a new permanent tax. I am aware that a similar measure—not quite the same, but similar—was taken before, but my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) did not merely add a tax. He altered the whole structure of Purchase Tax and simplified it so that we did not get awkward fractions. This year the Chancellor is consolidating the ordinary regulator and arriving at some very odd fractions which are very difficult for the retail trade to have as a permanent feature of its work. The fractions were 10 per cent., 15 per cent. and 25 per cent. but they are now 11 per cent., 16½ per cent. and 27½ per cent. —some advertisement for simplification.
If the Chancellor had exerted a good deal more mental discipline than he did over holding back public expenditure in the years when he was taking in extra taxation, it is interesting now to think of the amount of manoeuvring space and resources he would have available for stimulating the economy in future years and giving it that spurt and incentive which it needs for growth. Having denied himself this manoeuvring space he has denied the nation the growth it needs, not only this year but next year and the one after that.
Last year there were a large number of comments from this side of the House about the effect of the Budget on the social services and the lack of social service provision. We thought that after those comments we would have goaded the Chancellor into providing something this year beyond the very small, although welcome, provisions he has made. When the Financial Secretary to the Treasury was answering a point made by me during the debate last year, he pointed out that the reason why there was no social service provision in the last Budget was the option mortgage scheme which the gambling and betting tax were to provide for, but that is not being done this year. It is due to start in April, 1968. Here we have already another commitment for current expenditure next year. The measures for improvement chosen this year are very small but they are, nevertheless, an improvement.
Had I been asked to guess, I would have guessed that the one which the Chancellor would have included above all would have been an increased tax exemption for the elderly. We had a very


good debate in Committee last year on this. I should have thought that he would have gone some way to meet us this year. There are a number of reasons why he could have done so. The first among them was mentioned at Question Time today. There has been an increase in retail prices in 1965. The figures I quote are from the Ministry of Labour Gazette of the March edition.
In 1966 the average level of retail prices rose by rather more than 3½ per cent. The Ministry of Labour Gazette says that food prices, which are a high component of old people's expenditure,
were about 4 per cent. higher than in mid-January 1966.
In the sub-group of components, such as bread, flour, cereals, biscuits and cakes—all used frequently by old people—there was a rise in price of rather more than 6½ per cent. over the year. Fuel, the other important component, rose by 4½ per cent. in price. Old folk have had to take these increases in price in the two main components of their expenditure, but they had no extra tax relief last year and apparently are not to have any this year.
There is another reason why the Chancellor should change his mind on this subject. If he is right about reining back public expenditure next year and the year after, he is going to forego an increase in the basic rate of National Insurance pensions. As he knows full well, although much of the expenditure in that regard is financed by the stamp—and, he has lost manoeuvring space for increasing the cost of the stamp because of the burden of Selective Employment Tax on many employers—there is also a substantial Exchequer contribution to the basic rate of National Insurance retirement pensions. If he is right about reining back public expenditure there seems likely to be no increase in the basic rate. If he is wrong, he is not being frank with the House or with his back-benchers.
We know that the purchasing power of the pension has already fallen by 10s. for the married couple and 6s. 1d. for the single person and, on normal expectations of the pensioners, one would have expected increases in about 1968, because, under the Conservatives, we had increases quite frequently, at approximately two and a half year intervals.
I am interested in whether the Chancellor is serious about reining back public

expenditure. In any event, it is not really very surprising that we had a rather good testimonial from the Observer on 6th November, 1966, in an article by Mr. Brian Abel-Smith, who said:
From figures now available it seems that the present government's social spending is going to fall some way short of that of its Conservative predecessors.
I turn now to the effect of the Budget on the average citizen. First, the real incomes of the medium income groups were rising under the Conservative Government. They rose during the early stages of the present Government. Then we had an election and since then they have fallen. One must congratulate the Government on selecting the time for an election so carefully. Secondly, consumer expenditure was also rising under the Conservatives. It is now, of course, going down in the same way that average earnings are going down.
So the ordinary citizen has less to spend on his own home and on the things on which he wants to spend his money. Most people want to see an increase in the standard of living in their own homes. They want to be able to spend their own money on their wives and children. They do not wish to have the increased standard of living going entirely to the public sector at the expense of going where they want to see it most.
No doubt the right hon. Gentleman would regard as old-fashioned the idea that people believe that they can spend their own money as well if not better than he can. The right hon. Gentleman did not give any figures for his estimate of consumer expenditure, but one suspects that, in his future assessment, there is little room for increases in consumer expenditure. Perhaps the right hon. Gentleman will give us his forecast for up to 1970.
The ordinary citizen was used to both his income and his expenditure steadily growing at a rate of about 3 per cent. per annum from 1955 onwards and now, after the freeze on incomes, increased taxes, extra compulsion and more bureaucracy, he will not be any better off at the end of it.
This is slowly being realised and, of course, explains some of the reverses which the Government suffered last week. Ordinary people were led to believe that they had great expectations, but those


expectations are now turning out to be pretty bleak. Let us consider the effect upon the managerial group, the group of people from whom growth usually comes. We must consider what incentives they have to provide the expansion we need and which we shall continue to need even with a modest 3 per cent. rate of growth.
If they want to expand their industry, they first have to get skilled labour. This is not easy to get when no increases are allowed for differentials or extra skill. Indeed, the Prices and Incomes Order we shall debate tonight is an Order about differentials. If they wish to build an extension to provide for another unit of expansion, they have to find the capital. We know that the amount of capital left for investment after Corporation Tax is less than it was before because of the need to keep up the distribution rate of dividends. They cannot find the capital out of their own money and have to borrow it. But the Chancellor will keep Bank Rate at 6 per cent. as long as he can because his borrowing commitment is high and it helps him to sell more gilt-edged securities that way.
If they still want to consider further expansion they will have to pay a development levy. If they install modern automation equipment the chances are that they will be liable to the Selective Employment Tax. If, in spite of all this, they go ahead, they know full well as individuals that the Government will not let them keep a just proportion of the increasing rewards which they earn. They will ask themselves, "Is it worth it?" The answer probably will be, "No." So the spirit of expansion which I believe is there tends to be stillborn.
There will always be some private investment and the Chancellor would be in trouble if he suddenly got a lot of it this year in view of the amount of public expenditure. But the only private investment we shall get is that which goes to the maintenance of machinery and some which goes towards improving worn-out machinery when it is replaced.
Members of the Government have talked about social justice. There are many ways in which one can be socially unjust. One of them is to take away too high a proportion of anyone's income. It is being unjust to them, and indirectly

to the ordinary people whose only hope of betterment comes from the growth the managerial section of the community could provide. If the Government were more concerned to further the remarkable people, the ordinary pensioners and the ordinary people would do very much better.
I have come to the conclusion that the Government prefer theories of equality to practical progress. This, I believe, is one of the messages of the Budget. The Budget is one of a series and I believe that it is inevitable in the march of Wilsonian socialist theory. It is extremely dreary and offers very little hope of growth in future and very little hope of increasing prospects for the ordinary people—such hope as they may have had went with the statement made earlier today by the First Secretary. The Chancellor used a nautical metaphor, but we would say to him, in view of his Budget and the incomes statement today, that there is little wonder that his crew is in a state of mutiny.

5.17 p.m.

Mr. Brian Walden: It is always a pleasure to follow the hon. Lady the Member for Finchley (Mrs. Thatcher), first, because she is so charming; secondly, because she is witty; and thirdly because she is a quintessential representative of suburbia and always presenting views, especially those she has just presented, in conection with the furtherance of what she called "remarkable people", which are controversial. I shall say something about that later on.
First, however, I want to say something about my right hon. Friend the Chancellor of the Exchequer. I do not think that any Chancellor of the Exchequer has had a more difficult period of office. Even if one goes back over history—and I do not mention this for any covert reason—to the days of 1929 to 1931, I do not think that the problems that Philip Snowden had to contend with equalled the problems which my right hon. Friend has had to meet. He has undergone a constant, nerve racking strain.
I have read—and there may be some truth in it—that my right hon. Friend is a very orthodox man and is under the persuasion of orthodox advisers. That tends to be said from this side of the


Committee. The Opposition tend to say that he is under the persuasion of unorthodox advisers. But one thing needs to be put right. It is often suggested that, in so far as the Government have had to do unpopular things and to be inflexible about them, it is somehow the Chancellor of the Exchequer's fault. The perfect answer to that was given by my hon. Friend the Member for Edmonton (Mr. Albu) last Wednesday and I quote what he said because it bears repetition.
He said:
…it is not the Department of Economic Affairs any more than the Treasury which determines major economic policy. My right hon. Friend the Prime Minister said in a recent television interview that when it came to questions of major strategic decisions—major long-term financial decisions and even short-term ones, of course, because one cannot separate the long from the short—he was very much concerned, and it was of course, s Cabinet responsibility.
Within the limits of constraint on policy in which he has to operate, the Chancellor is doing all that is possible, and I think that this is recognised on both sides of the Committee."—[OFFICIAL. REPORT, 12th April, 1967; Vol. 744, cc. 1248–49.]
That expresses perfectly my view about the Chancellor and about the Cabinet.
If the Government have not been as radical as they should have been, if they have not made some of the choices which they should have made, I do not see why the Chancellor should be regarded as uniquely responsible. Be he as reactionary as Mr. Goschen, he is only one man among many. The responsibility, if there be a responsibility—if the case which I hope to make later be valid—is a general responsibility on the entire Cabinet.
The Committee will have gathered that I do not intend to forgo the privilege of the powerless, which is to give advice, though I shall bear in mind what President Kennedy said on that theme, that those who take bad advice are usually sacked, whereas those who give it simply go on to wreck the reputations of others. However, before I say something about what should be done. I must say a word about what should not be done.
The Chancellor has been bombarded from the benches opposite by a great deal of talk about incentives and by demands for reductions in taxation, personal taxation, and especially for what the hon. Lady, in what I thought a beautiful

phrase, called the furtherance of remarkable people. One must not confuse reductions in personal taxation with reductions in company taxation. The two issues are quite different. But, on the issue of personal taxation, there are three things which need to be said.
First, despite considerable study, there has never yet been the kind of evidence which hon Members opposite regularly claim to have that there is this relation between incentive and effort. Second, if it is argued that we need to make reductions because of a possible brain drain to the United States, I reply that it is the gross level of salary offered rather than taxation rates in this country which are responsible, if they are responsible at all, for our loss of such people. Incidentally, I am not sure that hon. Members opposite know what the tax burdens are in the United States. Simply to take Federal Income Tax is ludicrous because it takes no account of State taxation, of taxation at local level, of sales taxes at local level, and so on. In fact, the tax burden in the United States is far higher than is shown by reference only to Federal taxes. In any case, the argument is nonsense. The United States is a rich economy. It can afford to pay much more for certain kinds of skills, and it does. This is why people go, not because they work out relative rates of taxation in this country and in the United States.
Finally, and most important, in my view, let us not forget that, whatever may have been the hardships on business men—I am not unsympathetic to them either as individuals or as a breed—and whatever may have been the sufferings of the professional classes, those who have borne the greatest burden in closing our deficit on the balance of payments are the ordinary working people of this country. It is they who have lost the majority of jobs which have been lost. It is they whose wages have been frozen while they have had to undergo certain price and rent increases. They had to undergo them as a result of the measures of 20th July, for which I voted in the Lobby, knowing that they were bound to entail a reduction in real income.
Figures are quoted to show that that is what has happened in fact. Of course it happened. It was the reason why it was done. I supported it then and I support it now, even though the going may be


rough. Nevertheless, as I say, it has happened, and ordinary working people are worse off. To tell them now that what we ought to do is to further remarkable people and that there ought to be a redistribution of income adverse to them is as socially unjust as it is economically nonsensical. [HON. MEMBERS: "Hear, hear.]
I come now to what I regard as the Government's central problem. In one way, I am sorry to hear approving noises froth my Front Bench for what I have said so far because I am not altogether sure that some of my old friends and I will be on speaking terms by the time I sit down. However, one might as well bite into the sour apple, and the sour apple is this.
The Government have a range of commitments, some unavoidable but some certainly avoidable, which are out of line with their resources. As I said at the beginning, they are carrying them by choice of the Cabinet, not the Chancellor, but carrying them they are. Let us consider what we are trying to do and how thinly we are spreading ourselves.
We have to maintain sterling as a reserve currency. This is a factor highly conducive to instability. We have chosen to maintain the £ at its present level. We are pledged to secure increases in economic growth. Some of the taunts from the benches opposite about this are perfectly justified. It was a pledge which we made in 1964 and in 1966. We pledged also to see increases in personal consumption and in the general living standards of the people. We are pledged to see that levels of community provision are both improved and raised.
We choose to maintain forces east of Suez. We choose to carry a defence budget which, however carefuly costed it now is—without disrespect to the Secretary of State for Defence, I am deeply sceptical about how carefully costed defence budgets can be—is still a Great Power defence budget for a world rôle on the assumption that this country might have to fight at any time in order to honour one of its many commitments.
All this we have to do with the resources we have available. I do not hesitate to say that it is too much. The central dilemma and the Government's

greatest single mistake lies in their refusal to make certain admittedly difficult but necessary radical decisions. We cannot carry all of this, and some of it must be cut drastically as soon as possible, not tapered gradually.
Let us take defence for a start. We cannot bear the burden east of Suez. My right hon. Friend the Chancellor knows that I have never argued that, simply by making savings on defence, many of which would be in the medium term anyway and would not give immediate benefit, we could solve our economic problems. None the less, I am disturbed by how slowly the Government are moving on this matter, and I am not in the least placated by hints that what I want will come in the long run. I have doubts about that, having a little knowledge of how these commitments are entered into, what our relationship is with the United States in respect of them, and how much general political considerations and considerations of prestige, apart from purely economic considerations, come into the matter.
A cut must be made here. This has become imperative, psychologically, if for no other reason. Certainly, it must be done for the purpose of making sense of the sacrifices which, rightly in some ways, we impose upon our people here at home.
But that, believe me, is not the half of it. Let us not concentrate too much on east of Suez. My right hon. Friend the Chancellor is often told to act like Gladstone. It is an oft repeated piece of advice that he should allow money to fructify in the pockets of the people, and so on. I wish him to act like Gladstone in another way, and not simply east of Suez. I want him to be ruthless, however splendid the arguments in terms of commitment and however splendid in terms of prestige, in not allowing expenditure on the Services to rise. I want him to act, as Gladstone did in another context, in withdrawing from Afghanistan and the Sudan, by advising the Cabinet to withdraw from areas of tension.
In other words, I want a general overall cut in our defence budget which reflects reality. The reality is that, if we withdraw from Asia, there is no Power which directly threatens us, and there is no possibility that we shall have to fight a


European land war. It seems to me extraordinary to allow ourselves to be petrified by recent history into maintaining defence commitments which are out of line with current reality.
It is often said that our defence expenditure is not very much greater than that of other countries, but how many other countries must carry a reserve currency, and how many other countries are as dependent on imports as we are? Gladstone had a lot of sense, and the Chancellor will have a lot of sense if he realises that a defence budget of present size is wholly out of line with European realities, and it is beyond our ability to pay anyway.
I said that I did not think that defence was by any means the alpha and omega of the problem, and I do not. The hon. Lady talked about Government expenditure, and I do not want to see it rise consistently faster than the rate of growth, although I would be prepared to make exceptions in given years. But, at the same time, I do not want to see the present differentials between different categories of income earners solidified for ever; I want redistribution, which is one of the things that this party is about. I want to see a greater move towards equality and much more help given to poorer people. How can it be done without increasing Government expenditure? It is obvious; the message is clear—we must significantly reallocate our spending of existing revenue. I have already talked about defence, but it goes further than that. It goes to the question of selectivity in the social services.

Sir Douglas Glover: Hear, hear.

Mr. Walden: The hon. Member for Ormskirk (Sir D. Glover) must not be too quick. It is not his form of selectivity that I favour. I stand for the universal principle but, like Professor Titmuss in some of his recent speeches, I also stand for a very careful look to see that when we spend money for the alleviation of poverty, as I believe we shall, we make very sure that the money goes where it is most needed, and does not go simply across the board in a way that will merely increase consumption, put more pressure on the Chancellor and make his problems worse.
In addition to needing cuts in defence and selectivity in social services, we need to reallocate within the existing range of expenditure. That involves choices, and some of the choices will not be pleasant. It is foolish to maintain that the only unpopular thing to do is to restrain consumption, for it is not. There are plenty of other things that will effect people in all sorts of ways. They will probably be offended to discover that we are no longer a very great power. My hon. Friend the Member for Edmonton said bluntly that a lot of people in this country have not yet come to face reality, and I think that that is absolutely true. It is the Cabinet's job to see that they do, and that is what a radical Government should be doing. It should be destroying myths and illusions about our rôle in the world. That will not be popular but it very much needs to be done.
Any attempt to select within the social services will arouse a howl about a means test, but that should be faced, because no one suggests anything which corresponds to what was done in the 1930s. All that we suggest is a sensible look to see that valuable resources are put where they are most needed.
I now wish to say something about one or two other problems, the solution to which would help the Chancellor. First, there is growth. The hon. Member for Oswestry (Mr. Biffen) is not in his place, regrettably, but it is not his fault because I did not give him notice that I would say this. He asked the other day, "Where are the supporters of growth? Where have they hidden themselves?" I am not hidden. I still believe in growth and that it is obtainable, provided one looks at it sensibly and gets rid of a great deal of the loose thinking which, I must admit, existed in my party before the 1964 General Election.
It is true, as my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) said the other day, that one cannot find a Western economy that has been able to maintain a steady high rate of growth, except for the United States throughout part of the 1950s, and one must remember that the United States was carrying a rate of unemployment which would be unacceptable here. Therefore, the Chancellor has not done anything appalling by applying "stop-go" because I know of no economist on my side


of the House who has any way of managing the economy at the moment with existing planning techniques which would not involve something which would look suspiciously like "stop-go".
The fault is not that occasionally we must put on the brakes. It is that not only do we do all the things of which I talked earlier in respect of how we spend Government money but we do not really put the emphasis on those things that could best sustain growth. How does one get it? I suspect that it is via expectations of markets. It is the old, old story that one can get investment where it is likely to be profitable and can get growth if people know that they have a guaranteed sale.
I am not as impressed as many hon. Members—not perhaps as impressed as my right hon. Friend the President of the Board of Trade—with our overseas marketing. I contrast how we sell with how the Japanese sell, our projections for the Asian area with the projections, for instance, of the Mitsubishi combine. I am not in the least persuaded that British management in general yet values the salesman at the level it should, that his promotion prospects within his company are as great as they should be, and that realism has yet gone home in this respect, for marketing is not a function of production. It is the other way round. If one can secure a market one will get increased production. In the real world business firms do not produce goods for which they do not have a guaranteed sale. That is an inhibiting factor on growth. I do not want to go into that in more detail although I could, but I hope that the Chancellor will have considerable regard to that in the coming year.
No suggestion like that has practical force unless one starts to consider how we can exercise a greater control over management in this country. Though the large corporations respond very markedly to the Chancellor's intentions and the general level of demand, many medium range firms are living in a world of their own. I am not being offensive to them in saying that, but in a sophisticated modern economy some of the pressures which should apparently bear upon them do not. I have come over to the particularist view of intervention in the

economy. I am a convert on this, because I used to think otherwise. The view is not appropriate to the other side of the House, for it could use no such techniques, but we are talking of a Labour Government, a radical Government as it should be.
We must start interfering in the affairs of ordinary companies, though not by the creation of a large additional staff of civil servants. I have nothing but admiration for them, but I think that there is a simpler way to do it. Nearly all those companies depend on substantial private sources of finance. It is ridiculous that money should be disbursed to companies who cannot prove to the people disbursing it that their level of management efficiency justifies the money being given to them. The Chancellor, who has rightly been tough with the unions and rightly insisted that certain criteria be met by them, should also insist that capital should not be made available to firms which do not intend to improve their managements or give a greater priority to efficiency and do all they can to assist the export drive.
The last thing I want to talk about is the one that will be least popular and welcome with my friends on the Front Bench. It concerns devaluation, which I consider to be a very complex subject. Frequently, debates in the House give no valuable guide on that theme because they are not devised to meet subjects of this degree of technical complexity. Some people are for devaluation, some are against, but they can only deploy part of their case. I will not even try to deploy the case. However, I think that we should probably have devalued directly we came to power. That is an opportunity which we missed, but there were very strong reasons—there always are—for not devaluing.
Not having devalued, it was right to do all we could to support the £ at this level. After all, we had entered into a variety of commitments. We had given a series of pledges. To be forced into devaluation—that is how it would have been interpreted—is about the worst thing which could have happened to us.
Now the money is flowing in, I am not sure about what will happen in the autumn. In parenthesis I will say that I entirely disagree with the advice of hon. Members opposite about keeping


Bank Rate at 6 per cent. It should come down to 5 per cent. as swiftly as possible so that in the autumn it can be put back to 6 per cent. This would prevent us from having to raise it to 7 per cent. A Bank Rate of 7 per cent. gives a bad impression of the economic operations of this country. So I say that we should bring it down as swiftly as we can. But I was speaking of the £ and there was an argument for trying to maintain the £ at its present exchange rate, until now. Now is the time to look at the matter again.
I do not see any factor which can break our current deadlock which will not put greater pressure on demand of the kind which the Chancellor does not want other than varying the exchange rate. The only sort of demand which this country can contain at the moment is a demand which pushes us into producing more exports and getting a greater return on our exports. I have come to the conclusion that the only way in which we shall do that is by changing the existing exchange rate.
I should like to say a final word on this matter. I know that it is very unwelcome for the Chancellor to have to discuss it. Indeed, he will not discuss it, and quite rightly. He will say bluntly, "We shall not vary the exchange rate. We shall save the £ at its present level." So he should, otherwise we shall not have much left in the till by tomorrow evening.
However, I should like to dispose of the idea that joining Europe is an alternative. Everybody knows, certainly Members on this side of the House know, that we are in a deadlock. The margin for manoeuvre is very slight. The possibilities of achieving the sort of growth rate which we need are minimal. Some of my hon. Friends see joining Europe as a way of getting out of the difficulty. I see great advantages in joining Europe; I have always been in favour of it. But I shall be astonished when we join if we do not have to devalue. There is, therefore, a very strong case for devaluation being given serious consideration.
We have had some bad local election results, and I read in the Press that, therefore, the question in the Parliamentary Labour Party is a question of morale. I am not put out by the fact that we are

undergoing a period of unpopularity. I think that it is likely to be temporary. As the First Secretary of State said earlier today, it is axiomatic that in a period when wages outrun prices Governments are popular and that when the reverse happens they are unpopular. It would be wrong if either my right hon. Friend or the Cabinet thought that that was the real issue on these benches. It is not. Since nautical metaphors are very popular, may I say that we have no intention of manning the boats the first time we run into rough weather.
What will do the Government harm is if the belief spreads among my hon. Friends that they simply will not take certain decisions which they feel should be taken. In my view, the real trouble with the Government at the moment is that they give an appearance of drift. It may be an unjust appearance. It may be that there is a great deal in the pipeline. I hope that there is. If there is not, then that is something which will affect, not only the morale of those who sit behind the Chancellor of the Exchequer, but our long-term prospects in the country and, therefore, the long-term future of this country.

5.45 p.m.

Mr. Esmond Wright: I rise to speak in this Committee with a mixture of pride, which I hope will not be too obvious, and of trepidation, which I fear will be very obvious indeed. I would crave the indulgence of the House since I am making a maiden speech.
I understand that on these occasions a peculiar indulgence to the speaker is exercised. Indeed, I recall that Mr. Speaker himself, when ushered into his Chair at the beginning of this Parliament, said, "When you make a maiden speech the House will lean over backwards to be kind to you. After that, it is war." May I say during the remaining nine or ten minutes of the peace which obtains how very honoured I am to be in this Chamber. Anyone who is given the suffrage of the people of any constituency in these islands—and not least, if I may say so, of Pollok, in Glasgow—is an honoured person.
The House has already lived up to the reputation which it has, in all the constitutional textbooks, of being not only the best but the kindliest club in Europe.


That kindness has been shown to me by friends, on both sides of the House, and friends I may call them in no formal sense, since some of them are personal friends and indeed one of them is present today, the hon. Member for Berwick and East Lothian (Mr. Mackintosh). I am learning already that this is a many-sided House. Friendship was shown to me not only by members of the Government and of the Government party and, of course, by the Opposition, but by members of the Liberal Party and, indeed, by that member, single though he be, of a fourth party, the hon. Member for Carmarthen (Mr. Gwynfor Evans). Friendship has been shown to me by the many members of the many Labour Parties who are indicating their range of opinion in this debate. I am honoured to be here because for me Pollok marks a turning point in Parliamentary history.
I am obliged—but it is more than a matter of obligation—to pay tribute to the late Member for Pollok, Alex Garrow. I knew him very slightly, but I knew him to be a splendid constituency worker, very much concerned with the plight of old-age pensioners in his constituency and beyond, and who was personally and, indeed, conspicuously generous to them. He was very concerned about the transport problems of the west of Scotland. We all deeply regret his death. I regret very much the circumstances which have led to my being here.
Having said that, may I pay tribute to Alex Garrow's predecessors, who were men of unusual distinction. Sir John George represented Pollok for nine years. He began working life at the coal face in Fife at the age of 14. He moved up, or perhaps down, to the chairmanship of the Unionist Party in Scotland. Throughout his days in this House he was a very gallant and kindly person. Now he is in well-merited retirement.
He was preceded by Commander Galbraith, the present Lord Strathclyde. I am very honoured that his son, the hon. Member for Glasgow, Hillhead (Mr. Galbraith), is a colleague of mine. Lord Strathclyde was in his turn preceded by Sir John Gilmour, a former Secretary of State, whose son is also a colleague of mine on these benches, the hon. Member for Fife, East (Sir J. Gilmour). I suppose that in this sense it is possible to say that

Pollok is the nursery, not only of statesmen, but of generations of statesmen.
May I address myself for a few moments to the subject before the Committee in the knowledge that I am likely to be treated with unusual gentleness. May I bring the sights down from the high level to which they were raised by the hon. Member for Birmingham, All Saints (Mr. Walden) and look at the Budget, and, indeed, the condition of this country, with an eye on Pollok and see what seem to me to be the central problems before us; for it may, after all, be possible to say—may it not?—that what Pollok says and does in March, London will say and do in April.
There are, it seems to me, three basic problems before my own constituency and, therefore, in some measure, before this country; because Pollok is not only marginal. It is representative. Old Pollok, Pollokshields, and much of Pollokshaws, is an area which regards itself—dare I say it?—as true-blue Tory. But in the constituency are some 16,000 council house dwellers in Househillwood, Priest-hill and Nitshill who would not, I think, be likely to regard themselves as true-blue Tories at all. It is, I think, proper to say that the attitude, the problems, the viewpoints of that constituency—hardly anything but residential, on the south side of Glasgow—are fairly characteristic and typical of Scotland, and, I would think, in some measure typical of the United Kingdom as a whole.
I identify three problems in particular, and they are three problems on which in some measure I would hold the Chancellor culpable. The first of these is the Selective Employment Tax. This, had it not been brought up by myself in the course of the by-election campaign, would have been brought forward for him, because in fact—and these are not my own figures but are the figures of the National Opinion Poll—the issues which concerned the people of Pollok were, taxation 49 per cent., the wage freeze 41 per cent. and housing—not, the Committee will notice, unemployment, and hardly at all, it will notice, Scottish nationalism.
The issues of taxation are central not only to Pollok, because it is characteristic, but to this country, and they are central because, it seems to me, we need three


immediate steps. We need, in my judgment, the abolition of the Selective Employment Tax and not merely the tinkering with it which was indeed almost all that there was in that marathon Budget speech an hour and half long. We all listened with great respect to the skill of its delivery, but it was a Budget singularly empty of content. It seems to me that the Selective Employment Tax is open to a host of criticisms which have been referred to in this Committee ad nauseam and I am not going to re-emphasise them. But I do want in particular to stress that there is, in the Chancellor's view, what seems to me a totally false and artificial distinction between manufacturing and service industries. This was, indeed, driven home to him—was it not?—by the hon. Member for Dunbartonshire, East (Mr. Bence), whom I am glad to see in this Committee. But it goes beyond this. It seems to me that S.E.T. by this time is being built up on anomalies, and it is very dangerous indeed when we are being governed by a Government whose policy framework seems to be built on anomalies.
May I mention one of these in the Green Paper, which proposes a regional employment premium. This is designed apparently to give some 30s. a week to workers in the manufacturing industries in development areas, although it clearly cannot be introduced for another 12 months.
For Scotland, this Green Paper is virtually a valueless document. It is a valueless document because the north of Scotland, as the Chancellor well knows, is dependent on tourism and on hotels far more than it is dependent on manufacturing industry. In Scotland 59 per cent. of the labour force is employed in service industries; in the Highlands and Islands it is 76 per cent. May I point out, in the presence of the hon. Member for Edinburgh, West (Mr. Stodart)—and perhaps any reference to Edinburgh by a Glasgow man is always unnecessary and certainly inadvisable—that Edinburgh, Portobello and Leith are excluded from the development area of the rest of Scotland and that there is already a hue and cry being raised from Edinburgh to Westminster. For me, of course, culture ends somewhere near Bathgate. It only exists in Edinburgh for three weeks in the year!
The point I am making is that S.E.T. is a curious piece of fantasy, highly expen-

sive in its administration, taken by one Ministry and redistributed by another seven. The only policy for growth—to refer to what the hon. Member for Birmingham, All Saints said—must be a policy keyed to incentives.
The second point I would make is that Scotland is suffering acutely not only from the tax policies of this Government but from the failure to develop what was begun between 1961 and 1963, the infrastructure programme of roads and schools and hospitals. Scotland is, in this sense, certainly, yet an undeveloped area, and I would urge upon the Chancellor, in so far as anything said at this stage of the debate is listened to by him, to pay attention in the next few months—who knows when the next Budget is coming? There is a sort of unpredictability about it these days—to the infrastructure programme as outlined in the Toothill Report.
My third plea is one that it is incumbent upon him, because it came up time and again in the Pollok by-election. That is the request for this Government not to listen, as they are now being instructed to, to the message of William Ewart Gladstone, and not to have portraits on the walls, as I understand one Minister has, of Palmerston, but to think in terms of tax reform such as Robert Peel alone ever thoroughly carried out in this country. We need a tax simplification, a tax clarification of a fundamental sort. We need to link our tax policies to incentives. We need to encourage savings, not spending. I would have expected not a Green Paper on development areas but a Green Paper or a Pink Paper—its colour makes no matter—of what our tax system is to be if and when we go into Europe. We need a statement on a value-added tax, about which there is a great deal of public discussion but all too little knowledge, and certainly, as yet, no direction from the Government.
So my plea to this Committee in its deliberations on the Budget would be not to favour too many budgets too hurriedly arrived at, ill conceived as S.E.T. was, ill digested as the Corporation Tax proposals patently were, but to have a financial policy which is sustained over the years; which is clear to taxpayers whether companies or individuals; which is simple to understand; which is keyed to incentives and growth; and which encourages the people of this


country not merely in the sense of financial rewards but in the sense of imagination—which gives them in other words a sense of purpose and which renews their faith in their own destiny.

6.0 p.m.

Mr. Kenneth Lomas: I am sure that the whole of the Committee agrees that the maiden speech of the hon. Member for Glasgow, Pollok (Mr. Wright) was not only very well delivered, extremely fluent and very well argued, but contained just the right amount of humour and sincerity, on which all maiden speeches should be modelled.
If the hon. Member went into controversial issues towards the end of his speech, I am, nevertheless, sure that we all look forward to the contributions which he will undoubtedly be able to make at the various stages of this Budget and the Finance Bill and on other occasions. I will leave his comments on the Budget. It is only fair to leave it to Edinburgh to answer some of the accusations made from Glasgow.
But I was very grateful that the hon. Member referred to his predecessor, Alex Garrow, who was well known to all hon. Members on this side and who had many friends on both sides of the Committee. I remember a trip which I once made with Alex Garrow and other hon. Members from both sides of the House to Iceland, in 1965. During that night, incidentally, the Government were defeated three times. I do not know what conclusion we can draw from that. But as we stepped off the plane in Reykjavik, the hon. Member for Peterborough (Sir Harmar Nicholls) remarked, "Thank goodness this is one country that has not nationalised steel". That is quite true. If you have not got it, you can do nothing with it.
That is precisely the moral of the Budget. The lesson perhaps of Pollok, of London and of the other county councils is that no Government can be popular with the people all the time if they are seeking to work on behalf of the nation as a whole and not on behalf of one narrow section. It would be easy to influence votes and friends by having a give-away Budget, such as we had from the Conservative Government on

many occasions before elections. In 1964, we rightly started to act as a Government who were responsible and who had their priorities and targets broadly right, although in many instances the Government have been wrong in timing, tactics and content. Broadly however, they were heading in the right direction and, irrespective of seeking popularity they have been intent on pursuing the right course.
As a result, many hon. Members have rightly called the Budget dull, uninteresting and certainly lacking in the high drama of the Budget which we had in 1966. I agree that it was not a great springboard from which the country would jump into the competitive markets of the world, but it must be remembered that this was the only kind of Budget that we had the right to expect at a time when we were emerging from a period of severe restraint and trying to bring about a much more stable economy. Nevertheless, I agree with some of the critics of the Budget. I feel that the Chancellor had the opportunity of pressing down the accelerator a little, putting a little more into the economy and easing a little off the brake. He could have reflated slightly more.
We must, however, be grateful for some of the things which were done. Selective Employment Tax has at least been partially reformed. It is worth while considering—I do not know whether it is possible—whether the classification list that allows manufacturing industries to obtain the premium should be looked at again very closely to try to differentiate between, on the one hand, the manufacturing industries which are the candy-floss industries and which I do not think should have the premium and, on the other hand, the manufacturing industries which are playing a vital rôle in the economy and the export drive. That is one way in which we could be more selective in this form of tax.
As the Chancellor reminded us, as a nation we should be grateful that our balance of payments situation is in a much better state of health than it ever has been before, that in the last few years there has been an improvement of no less than £633 million, that our exports have risen over the last two years by about 14 per cent., that we increased our exports to


the United States by 50 per cent. in 1965 and 1966 and that we have managed to restrict the inflow of goods into the country to well below the average rate of increase, to about 3½ per cent.
To survive, we have had to borrow money from the International Monetary Fund, and this has to be paid back. When this point is made by the Opposition, they should recognise that the money which we borrowed was not to pay for debts incurred by this Government, but to pay for debts which the Conservative Government incurred and which resulted in the appalling balance of payments deficit they left us in 1964. A target has been set by the Chancellor of the Exchequer for a steady and sustained growth of 3 per cent. whereby it is hoped that we shall have a gain of £1,000 million a year.
But this can be achieved only if there is a change in our attitudes—a change in the attitude of management in how they produce and where they produce, a change on the part of the workers on the shop floor in what they do and how they do it. Unless we change our present out-dated and out-moded attitudes, we shall get nowhere. We must be prepared to use modern techniques, modern technological "know how" and modern methods. The Luddite mentality which has applied at both management and shop-floor level must go if we are to succeed as a nation in paying our way.
But if we are to change the economy and get it going, and if we want to see movement of labour from one section of the economy to another so that production can increase, we must be prepared to face the consequences of change. This is where I differ in part from some of my hon. Friends when they raise the question of unemployment. No one wants unemployment, but it must be recognised that if we intend to move people from the service industries or the nonproductive industries, by inducement or any other kind of Government persuasion, into manufacturing industries, there must be a redeployment of labour to make the economy stronger. We must have a movement of labour.
For a period of time we are bound to have a degree of temporary unemployment. But when we speak of a tolerable limit of unemployment, this does not mean a hard core of unemployed. What

is far more important, we must concentrate not so much on the volume of unemployment at any given time, but on the hard core of the unemployed. This is a problem with which we must deal. If we want change, this is one of the prices which we must be prepared to pay—it is the price of solving our economic problems.
The two lessons which we have learned as a Government—and I hope that right hon. and hon. Gentlemen on the Front Bench recognise it—are that we cannot get out of debt by further borrowing and that we cannot continue to shoulder burdens which will cripple or stunt the growth of the economy. As my hon. Friend the Member for Birmingham, All Saints (Mr. Walden) said, in a very eloquent speech, it is in the question of defence expenditure that the great majority of us on this side of the Committee say, "Enough is more than enough". When we are spending over £2,000 million a year on defence—£65 a second—that is the moment to decide whether we can continue to pose as a great world Power or whether we should not see how we can economise on our defence expenditure, wherever it might be incurred.
The Government have already, during their period of office, sought through their Budgets and their legislation to alleviate the hardship and poverty which existed when we came to power. They have sought to do this and to provide the revenue with which to do it. Sometimes, hon. Members opposite seem to imagine that the Government can manufacture money, that they have simply to ask for it and it can be produced. It has to be obtained from some source, either a growth of wealth or increased taxation.
We have tried to create and redistribute the wealth in our society not only through the Corporation Tax, the Capital Gains Tax and the curb on the expense account "racket", but in terms of social legislation which, as people should recognise, is quite unique in 2½ years. Among the obvious things which come to mind are the Rent Act, rate rebates, the rate support grant, redundancy payments, earnings-related benefits, increased pensions and the like. If the party opposite are constantly demanding more, either in the social services or in defence, we have the right to ask where they would get the money with which to do it. What


taxes would they increase, or what is their solution to the economic crisis? It ill becomes many of my hon. Friends on this side constantly to find fault with what has gone wrong—I agree that many things have gone wrong—and to omit all the great progressive legislation that the Government have introduced and the budgetary measures which they have taken to do it with.
Even so, have we done all that we could and should in the Budget to alleviate poverty and hardship? In a Question, a week or so ago, I asked how much it would cost to restore the purchasing power of family allowances. The 8s. family allowance which was introduced in 1952 would have to be increased by 4s. to give the same purchasing power today. The 10s. allowance, introduced in 1956, would have to be increased by 3s. 7d. to have the same purchasing power today.
I believe that my right hon. Friend the Chancellor should have increased the family allowances in his Budget. This was an opportunity which was staring him in the face, at a time when we were to have a continuance of the prices and incomes policy after 30th June, to help to create a prices and incomes policy based on social justice and, at the same time, give him the right to continue to ask for the co-operation of the trade union movement.
We have talked of the lower-paid workers many times in this debate. During the period ahead, the lower-paid worker with three or four dependent children will, quite rightly, demand an increase in his wage rates. I believe that if we could have increased the family allowances in the Budget and put into the pocket of the lower-paid worker with three or four dependent children a further 7s. 6d. to 11s a week, we could have stood a much better chance of getting his co-operation for some kind of wage restraint in the period following 30th June.
We simply cannot let the dam burst and the full flood of wage claims and everything else go bursting through. We must first have a trickle, then a flow and then the flood. This means that the Government must have reserve powers to control the recalcitrant rebels, either in the trade union movement or at management level. When people speak of the

voluntary system in 1967, let them remember that the voluntary system means a free-for-all, in which the lower paid worker has in the past suffered the most. The lower-paid worker stands a chance of a fair crack of the whip under a proper prices and incomes policy. I believe, therefore, that fringe benefits would have been one of the ways in which, in the Budget, the Government could have helped to create the climate for the correct kind of prices and incomes policy.
It must be recognised that as a country we are spending more on cash social security benefits than at any other time in the history of Britain. Some 7·6 per cent. of the gross national product is devoted to cash social security benefits. When the hon. Lady the Member for Finchley (Mrs. Thatcher), from the Opposition Front Bench, drew attention to this today, she should have borne in mind that on 10th April, in a Written Answer, I was informed that the amount of the gross national product which is devoted to cash social security benefits is today 7·6 per cent. and that in 1955 it was only 5·5 per cent. In 1964, it was only 6·8 per cent. In other words, in contrast to what the hon. Lady said this afternoon, we have continued to increase the percentage.
Equally, if we take social security benefits as a percentage of average weekly earnings for every year from 1955 onwards, we find that in every single instance the percentage of social security benefit to the average wage is higher today than ever before. This is a clear recognition that the Government are seeking to alleviate hardship and poverty and to create some kind of social justice.
Thus, the dilemma of the Labour Government and of my right hon. Friend the Chancellor of the Exchequer was the simple one of how to put right the neglect of the past and to find the money with which to do it. If we want more roads, schools and hospitals, as we say we do, we have to find the money from somewhere to pay for them. I have no greater wish than anyone else to have increased taxation on individuals, but I recognise the overriding necessity for these measures so that we can do all the things that we want to do in the future.
Surely, the only way is to work together and try to increase our production


by using all the modern methods which are at our command. If I might end with another nautical peroration, it is that we are all in this as one nation. We sink or we swim together. We either go under—and that would be the end of Britain as a competing nation—or we work together, management, unions, workers and the Government, to try to create a society of which we can all be proud, a society based on social justice and on which we can build for the future something better and fairer than we have had in the past.

6.18 p.m.

Mr. Julian Ridsdale: I am honoured to be the first hon. Member from this side of the Committee to congratulate my hon. Friend the Member for Glasgow, Pollok (Mr. Wright) on his very human and eloquent maiden speech. He referred to Sir John Peel and to Pollok being the birthplace of and a school for statesmen. I only hope that it will not be long before my hon. Friend is on a Conservative Government Front Bench, where he will be able to bring about repeal and reform of the many taxes with which we are being afflicted from the Government, and especially, above all, the Selective Employment Tax, which my hon. Friend mentioned so wisely.
It is difficult at this stage of the debate to say anything new, but I have listened to it for several days. I hoped to be able to intervene after the First Secretary had made his speech about growth. I found it as difficult to penetrate as a November fog in his Fulham constituency. The First Secretary was right to point out the value to growth of industrial efficiency, planning regional policy and skilled labour. Why, however, have the Government been so complacent about the brake on industrial growth that excessive direct taxation on the individual acts as a deterrent to growth?
Have the Government paid attention to the way Germany and Japan have been able to get an effective growth rate? The post-war recovery must play a part in both those countries, of course, and another important factor, particularly in Japan, has been an abundant supply of labour. However, during the course of the speech of the hon. Member for Birmingham, All Saints (Mr. Walden), I could not help thinking about the low

rate of military spending in both Japan and Germany.
One factor which I am sure that the Government and many people in the country have ignored is individual savings and how much those savings in Germany and Japan have been ploughed back into industrialised investment. It is that factor possibly more than any other which has caused the higher rate of growth in both Germany and Japan. It is because of it that Japan's growth rate over the last 10 years has been at about 10 per cent. a year. West German exports in 1965 reached a figure which was £1,000 million above ours. That has been done without devaluation, and I have been disturbed to find so many Members on both sides of the Committee advocating the use of devaluation as a means of increasing our growth rate.
Last year, Japan's rate of investment was 35 per cent. of her gross national product. I ask the Government what has been our rate of investment in the last few years, and what is our present rate. What is Germany's rate of investment, and how does it compare with ours?
When I look at the figures of the gross national product of Japan, it is surprising to find that in 1963 it was £22·5 million. The figure for 1965 was £30·8 million, and I am told that, in a period of four years, the gross national product of Japan is likely to have expanded by as much as half of our gross national product at today's rate. That is something about which we cannot be complacent, and to which we must pay attention, particularly the rate of incentive for investment which will go into industrial production.
During the course of the debate, I have been struck particularly by the number of Government speakers who have tried to say that Conservative policy is to hit the poorer people and only help those who are better off. I should like some of them to go round my constituency and see how recently pensioners have had to dip into their savings, and hear the grumbles of lower-paid workers. Since 1964, because of the rise of the cost of living, a man earning £500 a year has had the equivalent of £50 a year knocked off it. The only way to help the lower-paid worker and the pensioner is to create more wealth and increase the national cake, and then pay


increases in pensions and increased social benefits to the lower-paid workers. When that is done, I hope only that the Government this time will write a cheque on the Bank of England and not on a foreign bank.
The only way we can get an increase in the national cake is to give more incentives to all who want to get on and improve their standard of living, and who, at present, are penalised by high taxation. Do the Government realise how much high taxes are acting as a disincentive to extra effort and are the cause of extra wage claims? To work for seven days a week, as farm workers, railwaymen and seamen have to in my constituency, and then to have £5 knocked off for Income Tax does not seem justice to the ordinary man who has had to make that extra effort. I am certain that high taxation is a disincentive to extra effort throughout the country.
At the moment, we have high direct personal taxation. What we want to do is to shift the burden fairly from direct taxation to indirect taxation. However, certainly we are over-taxed, and we are over-governed. We all know the different number of taxes which we have had to bear since 1964. All have hit incentive and lessened confidence in the country. It must be faced, too, that although the President of the Board of Trade has boasted today that we have been able to increase exports by 14 per cent. in the last two years, a lot has been due to the fact that during 1963–64 my right hon. Friend the Member for Barnet (Mr. Maudling) was able to get more investment into industrial production—

Mr. R. T. Paget: Even more because everyone else's have been increasing by 28 per cent.

Mr. Ridsdale: Other countries have expanded their exports even more than we have, I agree.
However, when we talk about the growth in the rate of Government spending, it is right for us on our side to ask where the growth in spending should be restrained. What has disturbed me more than anything else is to see that a period of expansion under a Labour Government has not seen any expansion in industrial

production but an expansion firstly in the Civil Service, with 42,000 extra civil servants and 162,000 extra employees in local government. On a conservative estimate, the cost of each of those employees is £1,000, which means that the extra cost of Government officials in the last two and a half years has been £200 million. Surely some saving could be made there.
If governing by example is of any significance, this Administration costs twice as much as the previous Conservative Administration. I know that there are 20 extra Ministers and five new Ministries, but is it really necessary to have both the Department of Economic Affairs and the Treasury looking after the economic fortunes of the country? All mean extra laws and regulations and lend weight to the plea of my hon. Friend the Member for Pollok to get some repeal and reform into our system.
Why not have more indirect taxation? By so doing, I am certain that we should be able to save at least a bit of the £100 million in extra taxation which results from the cost of collecting taxes. Is it really necessary to pay out £100 million to see that drugs go to those people who really need them? Is it right to pay a tax on property for the huge £2,000 million education bill which we have to face today? In welfare, why not see that welfare goes to those who need it, rather than the blanket form of help which is given today? I will not speak about the extra expense which has been caused by the F111, or the extra expense being caused by the faults in the Government's Rhodesia policy. These, again, are costing the country over £100 million.
If one adds up some of the figures which I have given, one arrives at a figure between £500 million and £1,000 million of Government spending where the growth could be restrained. If it was restrained, we should not have to budget for a surplus of £700 million, as we are today. In other words, if a Conservative Government were in power, confidence would be restored. If we were able to restrain the growth in Government spending, we should be able to cut Income Tax by at least 1s., we could abolish the Selective Employment Tax, help the elderly and the lower-paid workers, and get the country going again. I am convinced that the


only way in which we can get the country going again is to do what the hon. Member or Birmingham, All Saints said in what I thought was an eloquent speech, namely, to get money to fructify in the pockets of the people, rather than in the coffers of the State.
I have said that many times in the House, and I have been accused of being a Gladstonian Liberal for saying it, but when one sees the net return on investments in the nationalised industries and compares it with the kind of net return that one gets in private industry, one gets some idea of what I mean. In many nationalised industries one gets a return of about 6 per cent. net. In the Post Office last year we got a net return of 0·3 per cent. It is no wonder that this country's performance is so miserable. In private industry one expects a net return of about 20 per cent. on average. I know that it is sometimes higher, and sometimes lower, but—

Mr. Eric Lubbock: Is the hon. Gentleman suggesting that the return in the nationalised industries, in gas, electricity and the Post Office, should be brought nearer to that which he has quoted for the private sector by increasing charges for gas, electricity and Post Office services?

Mr. Ridsdale: No, I am saying that we can get a better return by increasing efficiency. I am not satisfied that we are getting value for the huge amounts of money which have been invested in the nationalised industries during the last five years and it is value for money in capital investment that the country must have to get going again.
One expects private industry to provide a net return of about 20 per cent., and this is in spite of the fact that the Government are taking a 50 per cent. increase in profits, that 30 per cent. is being retained in the companies, and that only 17 per cent. is being distributed to shareholders. Why are the Government so much against distributed profits? They are the hardest earned earnings of all.
The hon. Member for Birmingham, All Saints said that he had been taken away from his rather more Liberal and Gladstonian views to be an interventionist in British industry because he thought that it was only the Government who could invest money properly. Let him realise

that the individual person, with the advice of investment experts, is a far better judge of investment than any man in Whitehall.
What has happened to the National Plan? What has happened to the Government's fuel policy, which has been proved so hopelessly wrong over the last few years? Did not the Government sell American securities too soon? What reason is there for believing that the Government can judge things better than the individual who is investing his own money?
I do not want to detain the Committee any longer, but I underline the fact that if the Chancellor wants to get growth in the economy, and wants to provide himself with room for manoeuvre, he must restrain the growth in Government spending and see that the savings made thereby go back to individuals, and that individuals are then given the incentive to save. If that is done, we will get a growth rate perhaps comparable to that achieved by the Germans. We must appreciate the momentum behind the Japanese rate of growth. Above all, we must realise that we cannot rely on money growing in the coffers of the State, but see that it fructifies in the pockets of the people.

6.35 p.m.

Mr. Elystan Morgan: I am sure that the hon. Member for Harwich (Mr. Ridsdale) will forgive me if I do not follow him in his speech. I could not possibly agree with almost any one of the points that he made. Indeed, his speech reminded me of the small boy's description of a net, which, he said, was a collection of holes tied together.
I think that it is obvious from the speeches of hon. Gentlemen opposite that there is a fair degree of agreement on the contention that the Government and the Chancellor had very little room for manoeuvre in this Budget. The point was put with absolute clarity and fairness by the right hon. Member for Enfield, West (Mr. Iain Macleod), when he said:
But now I believe that very moderate reflation is the right action to take."—[OFFICIAL REPORT, 12th April, 1967; Vol 744, c. 1216.]
I think that that sums up the narrow width of the difference between the Government and the Opposition on this matter. Collectively, during this debate


on the Budget statement over the last four and a half days, the performance of the Opposition has been very much like that of the broken-down actress who was described rather cruelly by a critic as "running through the whole gamut of emotions from A to B."
In a leading article in the Economist of 15th April, in a mixture of the now famous seafaring metaphors, it was said:
If the economy is on course there is no point in tinkering for tinkering's sake.
I think that that contention is reasonable if two assumptions can be made: first, if we accept that devaluation is not a wholesome alternative to recurrent pressures on the £ and the indigenous tendencies of international trade to drive us into adverse balances; secondly, that short of an unscientific prognostication it will not for some months be possible to know to a reasonable degree of certainty whether we can reflate without committing ourselves to a miserable cycle of recession and boom. Even granted that those two postulates are conceded, I still think that we are entitled to look to the Budget for economic and social decisions which fall short of substantial structural economic changes.
Although the Budget is naturally primarily a fiscal and economic review, nevertheless it is inevitable that people in Britain and elsewhere should look to the Budget to find some clue to the values and the priorities of the Government. I notice that one or two hon. Gentlemen opposite are showing certain signs of assent to that contention, but I fear that their record does not justify that. I remember reading the Budget speeches of 1961. Shortly before the Budget of that year the then Labour Opposition had demanded that the Government should substantially increase old-age pensions, and that demand had been peremptorily refused.
In the 1961 Budget the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who was then the Chancellor, made a gift of some £83 million to Surtax payers. He justified that in a moving and near-lachrymose speech when he said:
A man who is earning £5,000 gross today is not rich unless he has large private means as well. No doubt forty or fifty years ago, on that sort of income, one could have had a house in London, a house in the country, a large domestic staff and still have been able to save.

But today a man earning £5,000 gross, unless he has private means, has the greatest difficulty in providing out of his income…for the education of his family and for saving."—[OFFICIAL REPORT, 20th April, 1961; Vol. 638, cc. 1516–17.]
Very much the same plea in one form or another has been made by many right hon. and hon. Gentlemen opposite on behalf of what we might call the new destitute rich.

Mr. Ridsdale: Does not the hon. Gentleman agree that at least in that Budget the Chancellor did something for the elderly, which is more than the Chancellor did in this one?

Mr. Morgan: I am not sure that he did it in that Budget, but, obviously, in that Budget of 1961—and that is why I was quoting him—he gave a clue to the social and economic standards of the Tory Government of that time. In the same way, we are entitled to look to this Budget to find whether there is some clue as to the standards held by Her Majesty's Government.

Captain Walter Elliot: The hon. Member read a part of my right hon. and learned Friend's Budget speech. If a man with two children has provided for them and paid for their education and for other services, does the hon. Member think that he is well off with £5,000 a year?

Mr. Morgan: It is all a question of relativity. Even as a debating counter, I would be justified in accepting the argument of the hon. Member for Harwich as it applied to the lower-paid workers. He thought that the answer to the situation was for them to increase their income, and not for the Chancellor to act as a sugar daddy to assist them. He thought that their salvation lay in their own hands. Is there any good reason why that logic should not be applied to people earning £5,000 a year plus?
In this year's Budget there are a few reforms which show the direction in which the Government's sympathies lie. I am sure that we welcome the allowances made to widows and single women with dependants, and the concession to house purchasers. It is proper, however, to make a small point about Stamp Duty on mortgages. I can find no justification for not completely abolishing Stamp Duty on mortgages up to £5,500. If a person can


afford to buy a house for £5,000 without having to raise a mortgage he is not penalised by the revenue, but if a person's circumstances are such that he has to obtain a mortgage of £4,000 he has to pay a substantial sum in Stamp Duty.
I put down a Question on this point some months ago, and the Treasury Minister concerned replied with the quite proper defence that it was not for him to anticipate the contents of the Budget. I also know from another reply that he gave me that the loss to the Exchequer and the saving to the house purchasers would have been about £4 million. Is there any reason why a mortgagor should not be exempted in exactly the same way as is the person affluent enough not to have to seek a mortgage? Putting it another way, is there anything sacrosanct about the instrument of a conveyance which is not equally applicable to a deed of mortgage or a legal charge?
Like many other hon. Members, I would have wished to see some bold and substantial measures to alleviate the problem of poverty suffered by nearly 500,000 children in Britain today. I appreciate that the problem is an extremely complex one, in that it poses the conundrum of avoiding a blanket scheme which would benefit the needy and the affluent alike while at the same time avoiding a rigorous means test which in many circumstances erodes human dignity.
It may be argued that the creation of such a scheme is outside the classical scope of the Budget, but the aspiration may be cherished that the Government are contemplating the introduction of such a scheme elsewhere. I trust that the words of the Chancellor, when he said,
We intend to find the best measures to relieve this hardship "—[OFFICIAL REPORT, 11th April, 1967; Vol. 720, c. 1009.]
constitute a strict undertaking rather than a general declaration, of hope.
Another point I want to raise concerns aspects of the Selective Employment Tax. I am glad that the rigour of this new tax has to some extent been alleviated for part-time employees. I am sure that this will be of considerable benefit to those who derive their living from the tourist trade. I concede that S.E.T. has many general virtues to commend it. It broadens the base of the taxation system, as the Chancellor has so often argued—or, put

more crudely, it affords an extra cupboard for him to plunder. It gives indirect assistance to exports and in the long-term I am sure that it will deploy some labour from service occupations to manufacturing industries.
My quarrel is not with its general purposes, but with its specific results. Within certain regions there are consequences which I am sure the Chancellor neither contemplated nor desired. On many occasions the House has listened patiently to me dissertating on the economy of my constituency of Cardigan. There is no doubt that it has one of the lowest percentages, if not the lowest, of manufacturing industry in the whole of Britain. The one thing that is certain is that it has the lowest proportion of manufacturing industry as compared to service industry in the kingdom. I calculate that manufacturing industry in Cardiganshire is one-thirteenth the size of the service industry, or about 6 per cent. manufacturing as opposed to 83 per cent. service.
My county is a poor one, showing all the symptoms of an economy which has not the power of self-regeneration. There is the natural decrease of population, the high rate of migration, the low level of personal incomes, and the low dependence on Exchequer support. Yet in this area 13 times as many persons pay S.E.T. as receive a refund.
The irony of the situation is that if the county were richer in economic resources—if it had 25 per cent. manufacturing industry—not only would the tax burden be lighter but the refund benefit would be much more substantial. I am sure that Lewis Carroll would have made much use of such an ironic principle. In this case the Chancellor seems unwittingly to have followed the very words of the verse:
For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath.
If the Selective Employment Tax is to live up to its title it must be more sophisticated in its selectivity. It should not be an instrument to rob those localities which the Government have sworn to succour. I believe that the only proper and equitable course for the Government to take is to abolish S.E.T. for such areas as labour under special disadvantages, such as my constituency. Yet the abolition of S.E.T. for such places would not


cure the evils complained of. The situation would then revert to that which preceded the imposition of the tax.
Turning to the positive side, there is the regional premium which the Department of Economic Affairs announced the week before last. There is no doubt that if it is accepted by local bodies and adopted by the Government, as I trust it will be, it can be of immense assistance to the general economy of the regions. I am sure that Wales will derive considerable benefit therefrom, particularly since the proportion of manufacturing industry to service industry in Wales is very much higher than it is in England. I should like the Committee, however, to reflect not only on the total effect of the premium on a region generally, but also on its effect on certain parts of that region.
This is where the real danger lies. Let us take Wales as the example. If a premium of 30s. a week per employee in manufacturing industry were adopted and the whole of my country were eligible, why should a developer go to Mid-Wales when he could receive the same premium in a boom area like Wrexham? Why should an industrialist be interested in Rhondda when has has Neath, Llanelli, Swansea and Pontypool to choose from? Developers, being human, will go to the areas of greatest promise and shun the localities with indigenous economic difficulty.
In such a way, the effect of a regional premium will be to create further imbalance and inequity between one locality and another within a region. Although it will go a long way towards reviving the fortunes of a region generally, the real problem localities will still be untouched in their misery.
Judged from such a viewpoint, therefore, there would be a great weakness in a scheme which, although conductive to better balance between one region and another, yet left, behind a facade of general regional progress, a litter of derelict and decaying localities. Obviously, there are radical and dynamic developments to be considered, which are outside the classical scope of a Budget. But when the Chancellor introduced S.E.T. a year ago he declared the possibility of regional differentiation. I am certain that all that has happened in the

past twelve months has borne out that necessity.
There must be differentiation not only between one region and another, but also between one locality and another within the same region. How long will we have to wait? How inevitable is gradualness? How gradual is inevitability? How eternal is the patience of those living in communities whose economic and social life is inexorably draining away?

Mr. Jay: My hon. Friend will realise, of course, that it is possible now to discriminate in terms of I.D.C.s within region as well as between them.

Mr. Morgan: I readily accept, that in a negative way, I.D.C.s, which the Tory Party was willing to fling around like confetti, are now being used intelligently. However, side by side with that, I plead that there must be positive developments—bold, dynamic, radical policies to enable development to be channelled into these areas of indigenous difficulties.
In short, I plead for two things in the short-term for areas of economic decline and poor areas with a high disproportion of service occupation to manufacturing industry. First, Selective Employment Tax should be wholly abolished; secondly, the regional premium should be paid not only on manufacturing industry, but also, perhaps at a reduced rate, on all other industry thus inspiring growth in employment.

6.54 p.m.

Mr. Maurice Macmillan: I begin with what is becoming an annual plea from one side of the Committee or another—for personal savings, small savers and the new investor. In a period when the Chancellor seems to have been looking to an increase in personal spending some time later in the year, with Government spending continuing unchecked, with increased private investment hoped for next year, surely he could have given a little more encouragement for private savings, other than the increases in the limit of Premium Bonds and National Savings Certificates allowed, and—very welcome indeed to many of us who have been pressing for it for some time—allowing the Trustee Savings Banks to hold equities and run their own unit trust.
It is a great pleasure for me, both as an expatriate Scot and the publisher of


my hon. Friend the Member for Glasgow, Pollok (Mr. Wright) to congratulate him on a fluent, able and entertaining maiden speech. The fact that he is not here in no way detracts from the sincerity of my congratulations; indeed, I hope that he is enjoying a well-earned rest after what is always a nerve-racking experience.
It is some time since the cartoonists and commentators invented the legendary figure, "Mr. Butskell", but the Chancellor seems to be doing his best to create a similar figure, that of "Mr. Callalloyd". I felt somewhat nostalgic, listening to the hon. Member for Birmingham, All Saints (Mr. Walden), agreeing with almost every word he said, and thinking what a long time ago it seemed that I was making virtually the same speech from almost the same place in the Committee on the 1961 and 1962 Budgets. The only slight difference is that I was, unfortunately, unable to defend my right hon. and learned Friend's version of stop-go with quite the vigour that the hon. Member defended the Chancellor's.
The 1967 and 1962 situations are remarkably alike—the axe and the stern measures from the previous July, followed by a neutral Budget which consolidated the regulator. My right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) expected a 4 per cent. rise in consumer spending, thus achieving the necessary reflation automatically. He was disappointed. In fact, unemployment rose and continued to rise, despite what the Treasury had told him. In the circumstances, one could call the Chancellor's optimism over the chances of a 3 per cent. increase—presumably automatic in consumer spending—a triumph of hope over experience, or, more accurately, of Paish over Kaldor.
It is in some ways a depressing comment on the apparatus and machinery that both parties have developed for managing the economy to think that, five years after, here we are again in very much the same situation—with one big difference, that the measures of deflation, the degree of convention, that a Labour Chancellor has chosen are more severe, mere conventional, less imaginative and even less dedicated to the concept of growth Clan those of successive Tory Chancellors. It is no good right hon. and hon. Gentlemen opposite seeking to

defend their conduct; the whole ethos of their party is betrayed by the measures which they are taking.
I hope that, when he answers, the Chancellor will show that he has a slightly wider interest than simply the cash flow element in our balance of payments, which seems his main concern nowadays; though it was less so in the old days when he spoke from the Opposition benches. I hope that he will be less willing to sacrifice the long and medium term to short-term gain, and especially resist the temptation to reduce further the opportunities for investment, particularly overseas.
I found the right hon. Gentleman's language in opening his Budget extremely disturbing. The Chancellor said:
With the help of the steps I have taken to moderate private investment abroad, the net outflow of private capital was small, and the deficit on long-term capital as a whole was reduced to £128 million. In 1964 the corresponding deficit was £368 million. So this is an improvement of £240 million in two years."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 975.]
I was disturbed by that statement because of its tone in describing this change as an improvement—as if it were a saving in spending rather than showing an inability to make worth-while investments. Like other Treasury Ministers, the Chancellor has the habit of speaking as if spending and investment are precisely the same. This indicates a somewhat narrow point of view on the part of the right hon. Gentleman—a point of view more suitable to a cashier than to an investment consultant or financial director.
During the period the Chancellor quoted with such pride, inward investment into the overseas sterling area went up from £357 million in 1964 to £546 million in 1965. I regret that figures for 1966 are not available. At the same time, however, the balance of the overseas sterling area with the non-sterling area on current account rose to a deficit of £1,000 million.
That, briefly, is the sum of the argument which I put forward in great detail last year and which I do not propose to repeat tonight. It is simply that, very largely, overseas investments from the United Kingdom are largely financed by inward investment into the overseas sterling area; that this overseas investment


from the United Kingdom is needed to produce the interest, profits and dividends required to balance what we have to pay out from the United Kingdom and the sterling area as a whole.
The figures published since I put forward that argument to the Committee last year tend to support my case, although the Chancellor and the Chief Secretary seem totally unrepentant. But before I come to the curious arithmetic which the Chief Secretary developed when he spoke to the Committee last week, there is a question that I must put to the Chancellor. I hope that he will answer it in detail because he inadvertently—I am sure that it was done inadvertently—misled the Committee when he said:
Net invisible earnings last year were abnormally low at £77 million. They were depressed by a number of factors. Outgoings increased because we resumed payments on the North American loans".—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 975.]
That clearly implied either that we were repaying part of the American loans or that the heavy charge of interest due on them came into the figures, ending in an abnormally low balance of only £77 million on invisible account. However, the balance is contained in the summary Table No. 14 in Part II of Cmnd. 3244. I cannot find any reference to the payment of any loan in the tables which go to make up that summary table—that is, tables 15, 16 and 17, although the £77 million is accounted for entirely and wholly by the figures quoted in those tables. It is, therefore, of some interest to know what the right hon. Gentleman meant when he said that invisible earnings last year were depressed to £77 because of payments on the American loans.
If the right hon. Gentleman was referring to principal, there is no element of repayment of principal in the figure £77 million of the balance in the summary or in any of the details that make it up. If it is interest, where does it come? I do not believe that it comes in Table 17, which refers to private services and transfers; I cannot find it in Table 15, unless it comes under the somewhat mysterious heading of, "other transfers", which accounts for only £10 million; or in any of the other tables concerned with

interest, profits and dividends and which, I have understood, were concerned with private account alone. I hope that we will be given a definite answer to what the right hon. Gentleman meant when he tried to excuse the very low figure on invisible account by implying that there had been a heavy repayment of American debt.
The reason why this figure is so abnormally low this year goes to the crux of my argument. We have the £23 million by which Government spending overseas has gone up. On private account there is a small saving, of £11 million, for travel; shipping is £8 million better off, although aviation is £2 million worse off. The earnings listed under "other services" are worth £14 million less and there is an increase in private transfer overseas of about £29 million—a pattern of developing lack of confidence in the Labour Government and the future of this country under them. Net interest, profits and dividends show a decrease of about £34 million.
This all indicates a different interpretation from the arithmetic advanced by the Chief Secretary, for it shows that already, in such a short period, earnings on our investments overseas are beginning to fall off while the interest, profits and dividends which we pay out on money invested here and in the overseas sterling area are rising. During the past year the debits on this side of the invisible account went down by £5 million, but the credits—what we earn overseas—went down by £39 million. If we are being selective about investments, the Chief Secretary and the Chancellor have been curiously selective in doing their sums. In some ways the Chancellor gets more like Humpty-Dumpty every day—in his use of words, rather than in his physical appearance.
The Chief Secretary taunted the former Conservative Administration when he said:
It was their laxity which contributed substantially to the deficit of £800 million with which we are still having to cope … We do not propose in this respect to repeat the irresponsible conduct of our predecessors."—[OFFICIAL REPORT, 13th April, 1967; Vol. 744, c. 1399–1400.]
Was it irresponsible of the Conservatives to build up our foreign investments overseas so that the earnings from them, which were £500 million a year in 1955,


had, 10 years later, in 1965, increased to £1,000 million a year? Now, after a relatively short period of Labour Government, this trend has, for the first time since the war, been reversed and our earnings from foreign investments are going down, although Government spending in the same period is continuing to rise. At the same time, the situation is made worse because there is a mounting deficit in the overseas sterling area on invisible account arising out of interest, profits and dividends flowing out.
The value of overseas investments, leaving aside the indirect effects, which the Chief Secretary scorned, are obvious. They may not bring as big a return on capital as some investments in the United Kingdom, although the average return in the 10 years I quoted, of 8 per cent. net on capital invested, seems a reasonably adequate return across the exchanges. As for the Chief Secretary's absurd argument that the taxes paid there go to pay for the welfare services in those other countries, he omitted to refer to the other side of the argument, which is that the taxes paid on foreign investments here and in the overseas sterling area go to pay for our welfare services in this country in exactly the same way, and save us payments across the exchanges.
When we get down to the problem of hew best to invest overseas the capital of the United Kingdom, when we consider the question of selectivity, it is all very well for the Chancellor of the Exchequer and the Chief Secretary to talk glibly about doing it where it is most needed. What needs are they talking about—the economic or the political needs? I am prepared to accept that the Government are as good a judge as any of where to place investment overseas for political or even social reasons, in the form of aid to developing countries, but that is not what the right hon. Gentlemen were talking about. They were talking of the economic effectiveness of overseas investment. Here, I believe that this judgment is less likely to be exercised effectively by a few people within the Government's service than by a relatively large number of industrialists, financiers and others who make these decisions.
It is only too easy to go for the safe return—the investment that brings a moderate return fairly quickly, but which is probably only marginally worth doing, if it is worth doing at all—and to leave out those investments which, made in the past, have contributed to these large overseas earnings that our capital now brings in, but which, at the time, may have seemed, must have seemed, rather risky, and perhaps even dangerous.
I can only think that it is quite wrong to argue that it is economically sound to restrain United Kingdom investment in Australia, where it brings in a good return—incidentally, allowing a greater American investment there and building up again charges for interest, profits and dividends which the pooling arrangements reflect in the balance of payments situation of the United Kingdom. It seems absurd to argue that this is less profitable for us than investment in the developing countries of the Commonwealth. I do not suggest that investments should not be made in these other territories. I say that the arguments that favour investing there are more often political than economic.
In this and in other matters it is not the Conservative Party that is being irresponsible, but the Government. Every time, and in every danger they get into, the Government are willing to take the short-term way out and risk great damage in the long term, especially in investment at home and overseas which, once lost, can never be effectively regained, simply because it is politically easier to restrain investment than to deal effectively with expenditure or to face the other possible solution of devaluation
I agree with hon. Members who have said that forced devaluation is in all circumstances disastrous, but there comes a time when it may be considered as possibly the correct line of policy, not forced on the Government but taken deliberately on the ground that our currency is relatively overvalued, which, in itself, is no necessary disgrace to the country or condemnation of its economic policy. I suggest that this is particularly so as regards the United Kingdom, when there is not only the question of whether our currency is over-valued in relation to ourselves but whether it is over-valued in relation to the overseas sterling area,


which can, in itself, be an unnecessary drag on our balance of payments.
Reflecting on the proud claim of the President of the Board of Trade that we are exporting enough to pay for over 99 per cent.—or whatever the percentage was—of the import bill, I believe that we are putting far too heavy a burden and far too big a demand on our export trade, and that this in itself is one of the factors in inhibiting growth. Like the hon. Gentleman the Member for Birmingham, All Saints (Mr. Walden) opposite, I believe that it is the market that produces the product, rather than the other way round. This Budget, and the Chancellor of the Exchequer by means of it, has chosen to perpetuate by inaction as it were, a pattern of policy that I should find deplorable in a Tory Chancellor of the Exchequer I find it incomprehensible in a Socialist Chancellor of the Exchequer.
I deeply regret that this pattern is still being continued in spite of all the election promises that came from the benches opposite—promises now shown to be empty.

7.15 p.m.

Mr. Ben Whitaker: I will speak very briefly, all the more so because on Wednesday I will be supporting a proposal to limit the length of speeches.
The Chancellor of the Exchequer's Budget judgment is that he has no room to manoeuvre. I would, therefore, ask him to tell us what his plans are and what the prospects are for the long term reform necessary to escape from this straitjacket. What the country and the House of Commons wants to know is how soon my right hon. Friend has any real hope of being able to effect a reform of the international monetary and liquidity system.
As long as we in Britain have to maintain sterling as a world currency, our entire economy and all our hopes and plans for social progress will be at the mercy of the pressures which that entails. Like certain finance companies whose difficulties have been in the news recently, we in this country are having to borrow short and lend long, and are, therefore, compelled to deflate as soon as our growth rate approaches 3 per cent., with all the unhappy human consequences which result.
Even within the terms of the overall limitation, many people find it very disturbing that there is no social content discernible in the Budget. I believe that redistribution is necessary as a solution to our internal difficulties—redistribution not so much of wealth as of opportunity. For reasons equally of growth and of social justice, I believe that we should reduce the rates of taxation on earned income—coupled with providing equal opportunity for people to earn—and to do this by taxing unearned and inherited wealth more. The effect would be to ensure that the rewards go to those who actually do the work and earn the wealth in this country rather than to those who at present are able to enjoy the wealth.
I believe that the existing scale of inequality which was faced by the Government when they took office, is still insufficiently recognised in Britain. The figures show that in 1964 2 per cent. of our adults possess over 40 per cent. of our assets; that 7·6 per cent. of them enjoy 61·3 per cent. of the wealth; while, at the other end of the scale, 71 per cent. of our adults have assets of less than £1,000 each and are, therefore, quite unable to change the quality of their own and their children's lives.
What I find impossible to defend in our present fiscal system is that the highest child reliefs—in the same way as the highest educational and mortgage allowances—are going to the richest families, who, in fact, need them least. Let me contrast two families, each possessing four children. To the family whose earnings are only £10 a week the State gives an allowance of £86 a year, but to a similar family, with earnings of £30, the taxpayers give allowances amounting to £240 a year. This makes neither social nor economic sense.
The lack of social content in this Budget was criticised in a leading article in The Times. This Government were elected to change the country internally, and if they stand still they are failing the mandate that was given to them. What is the point of having a Labour Government if they act only to fossilise the existing inequalities?
Conservatives are incredulous that the Budget has failed to implement a gifts tax when almost every financial newspaper had been expecting it—indeed, advising it.


It has been said that anyone whose estate pays duty to the State under the present law is either malicious to his heirs or has been badly advised. Let us have a simplified taxation system and at the same time, plug the indefensible number of anomalies which have been well known for many years. The proceeds could then be used for the relief of child poverty or to help pensioners, without any reflation being necessary.
The Chancellor spoke of another searching review of tax avoidance. This is an annual refrain in every Budget. To cite a specific criticism, the Chancellor proposes only 4 per cent. interest on arrears unpaid by laggards. But this will still be cheaper than having an overdraft at the bank. Why not make it 8 per cent.? The present opportunities for tax avoidance bring the whole fabric of the law into disrespect.
This year in particular, when there is no overall inflation or deflation, is a chance for the Chancellor to deal with those anomalies and reform the taxation system to increase its social purpose. I ask that the House of Commons might consider having a Select Committee on taxation so that there could be an all-party examination of the most effective arid simple forms of taxation. Then the direction in which they are implemented could be a question of relative social values on either side of the Committee.
Finally, I would like to make a specific suggestion for painlessly raising money, which, I think we all recognise, is an unenviable and thankless task for the Chancellor. Last year, there was a welcome on all sides for a tax on gambling. This was many years overdue. The Government should not stop here, but should make an even more radical and beneficial reform in this direction. Hon. Members on both sides of the Committee would like to see a national lottery such as that by which Ireland and other countries finance constructive projects.
Gambling, for better or worse, is undeniably ingrained deep in our national character. We are not able to change that by any amount of legislation. We must recognise that it is probably one of the fastest, if not the fastest, growing and most profitable industries in Britain at present, whether we like it or not. So why not harness this force and take it

into State ownership for the benefit of the public?
With the proceeds we might achieve many projects—for example, in medical research or cultural research—about which hon. Members on both sides of the Committee know and for which there is often a general demand, but which at present we cannot afford. I hope that the Chancellor will very seriously consider a radical and I believe generally acceptable reform along these lines when he prepares future Budgets.

7.24 p.m.

Sir Ronald Russell: I hope that the hon. Member for Hampstead (Mr. Whitaker), in whose constituency I very nearly live, will forgive me if I do not follow his remarks on general taxation, but confine myself to a particular tax mentioned by various hon. Members in this debate over the last four days—what my right hon. Friend the Member for Barnet (Mr. Maudling) calls "fiscal lunacy". I mean, of course, Selective Employment Tax.
In what I say I shall require to re-echo some of the speech made by the hon. Member for Willesden, West (Mr. Pavitt) last Tuesday. He is one of my colleagues in the representation of the new London Borough of Brent. I did not hear his speech, because I was listening to my right hon. Friend the Member for Barnet making speeches in Wembley and Willesden during the G.L.C. election campaign, but I have read the hon. Member's speech.
The hon. Member dealt partly with the effect of Selective Employment Tax on the Co-operative movement, coffin makers and undertakers, sausage manufacturers and one or two other industries with which I am not very much concerned. I want to speak about its effect on other kinds of business.
During the last two or three months I have made inquiries about the effect of S.E.T. on 50 or 60 industrial firms and businesses in my constituency. All except two condemned the tax in a way which varied from mere mocking laughter to, "Well, I get it back plus premium, but there could not be a more stupid tax." That came from a printer. Of the two in favour, one was not surprising because it came from the firm whose former chairman is a member of the Government,


Lord Brown, but some of the employees of the firm came to see me a few weeks ago to protest against the compulsory wage freeze as other employees have gone to see other hon. Members. Usually, one gets a volley of questions and interruptions when one goes to works meetings at election-time, but when they came to me a few weeks ago their attitude was very much more friendly and they were far from enthusiastic about S.E.T.
I want to give three examples of some of the bad effects of this tax among the firms to whose chairmen or accountants I have spoken. A firm of motor engineers in Wembley, South said that the effect had been to put up its workshop prices 2s. 6d. an hour and made a difference of 2½ per cent. increase in the cost of supplies of articles for making motor cars. Its sales have dropped in the past year and it had no option but to pass on the cost of the tax to its customers. Another motor firm laid off 20 per cent. of its staff. They were mainly part-time workers. I am glad that the Chancellor has remedied that anomaly, but there are still many more anomalies left in regard to the tax.
There is a firm of chemical manufacturers which has a factory in Plymouth which qualifies for the premium, but its distribution centre in Wembley pays and gets nothing back although much of its distribution is for export which the Chancellor should not want to penalise. It seems very unfair that one of the firm's factories should pay the tax and get it back plus premium and that the other should pay it and not get anything back.
Then there is the famous organisation of which most hon. Members know, Wembley Stadium Limited, which owns the Empire Stadium, where there are football and greyhound racing, the Empire Pool, where there are various kinds of entertainment such as ice shows, swimming, table tennis championships, the Horse of the Year show and Christmas pantomimes, and Wembley Bowl, where there is bowling and a restaurant. This tax is a great burden and a nuisance to Wembley Stadium. The company cannot pass it on to its customers, or put up the prices of seats, because if people do not think that a show is worth seeing at the price they just will not come to it. This applies to all three places, the stadium, the pool

and the bowl. In any case, the stadium could not increase prices of seats for the Cup Final and other great events without consulting the Football Association.
S.E.T. has a bad effect on the company's trading as one of the country's great entertainment enterprises. The stadium comprises an invisible export. The World Cup matches brought great crowds to London entirely because of the facilities provided at the stadium.
Printers who set up type get the premium, but builders who set up bricks or concrete do not. The creation of type for people to read is rewarded by a premium. I am not saying that is wrong, but the creation of buildings for people to live in and work where they do most of their reading is not and this cannot make sense. To leave out the sales staff of a manufacturing industry is equally unintelligible. If the sales staff ceased to function, all work on the manufacturing side would be wasted.
Was there ever anything more Gilbertian than to collect £1,100 million from the country and then pay back £924 million, as is shown in the Financial Statement, including the premium, thus making a yield of 16 per cent.? I wonder exactly what the cost is of collecting the tax and then paying so much of it back again with the premium. It is as if one of the statutory undertakers were to dig a series of holes in the road, leave them for three months and then return and nearly fill them up but not quite, thereby leaving a series of bumps over which every vehicle has to run.
I will not discredit the Chancellor of the Exchequer by accusing him of the authorship of this obnoxious tax. It savours far more of the Danube than the Thames or even the Taff, on the banks of which the Chancellor's constituency lies. It is full of anomalies. Indeed, it is in itself the biggest anomaly ever joined together in two pieces of legislation. The only way to remove all the anomalies is to abolish the tax altogether and replace it by a non-discriminatory tax, such as a value-added tax, for example. I hope that, in the course of time, the Government will realise this and do something about it.

7.31 p.m.

Mr. R. T. Paget: As a farmer I have always felt that there


was a lot to be said for a payroll tax. I say that largely because I have seen the efficiency of farming improve more than that of any other industry in this country, and the cause of the improvement has been the huge increase in its labour costs. It was only when farmers began really to have to pay for their labour that they began to use it efficiently. I have felt that there was a lot to be said for making labour more expensive if one is to begin to use it as efficiently as, say, the Americans do. But then I find a payroll tax in which the money is returned just at the point where I think it should apply. It is rather difficult to follow the logic. But that is not the main subject with which I want to deal.
My right hon. Friend the Chancellor of the Exchequer expressed his ambition that Britain should pay her debts, that she should balance her payments and that she should increase her production by 3 per cent. That has been the ambition of successive Chancellors throughout what I think must now be added up to 15 wasted years. These are years of world expansion in which our increase has been less than that of any of our major rivals; years of expanding trade when our share in world trade has become ever smaller; years during which our investment, the building up of our means to produce, has lagged behind our rivals; years of relative decline; years of decadence. Even the inadequate objective of a 3 per cent. increase in production has not on average been achieved.
Now we are faced again with what seems to me a very familiar situation. Unemployment has again failed to provide redeployment. On the whole, it has hit our export industries hardest. The slack in the economy has been felt in the investment industries more than in the consumer goods industries. We have lost investment and, above all, we have lost industrial morale.
Our greatest need is productivity. I entirely agree that productivity is primarily an employer's function. It is a function of management. But, none the less, a factor in it is the morale of the labour force. That morale has always been affected by fear of unemployment. All the restrictive practices of labour are labour's defence against unemployment—labour's means of not working oneself out of a job.
Gradually, we had begun to overcome that fear. Now it has been restored. There is again the fear of unemployment. There is again this rejustification of every restrictive practice. I do not know how long it will take to work ourselves out of that situation. So we stand, and I can see no earthly reason to believe that our economy today is in any better shape to afford expansion than it has been before.
If we are to escape from this circle, I believe we have got to come to terms with reality, with our new place in the world. I will deal with what seem to me the three vanities of our day. The first is the "top table" vanity; the second is the "new Commonwealth" vanity; the third is the sterling vanity.
The first, the "top table" vanity, is the idea that we have a sort of special influence in the world because we maintain an independent nuclear deterrent. It impresses no one but ourselves. It did not impress Sukarno and it does not impress Nasser. Heaven knows, it does not impress the Russians. Least of all does it impress our allies. That vanity includes the maintenance of an oceanic capacity—a pretended capacity to maintain oceanic interests which are now dead.
How unreal that capacity is, is well illustrated by the situation in Aden, in which we are being bullied by the Egyptians with an army of invasion in the Yemen. When I suggested the other day that we might cut the communications of the Egyptian Army in the Yemen, which seems to be at our mercy, I got exactly the same answer as I got for the same proposal at the first election I ever fought, when I urged that we should cut the communications of Mussolini's Army in Abyssinia. I was told then and lately that such a deed would be an act of war.
If, when right is on our side, when our interest is there and when the strategic situation is supremely to our advantage, we refrain from an act of war because it is an act of war, why on earth sweat our economy with the enormous expense of putting ourselves in a position to take action which we can never take? So far as we are concerned, we are impotent in these oceans—impotent largely because of our needs and even more so because of our words. Let us face our real position.
The second vanity is the "new Commonwealth". We have told ourselves


that we have lost an empire but gained a new Commonwealth. What do we mean by that? The Prime Minister described it as a great experiment in multiracialism. What does he mean by that? Is it to be found among individuals? If he thinks that, he should go and look at Brazil or, perhaps, at the Portuguese colonies. Where is the multiracialism? There is no more mixing of the races in, say, Kenya than there is in Rhodesia. I was in Kenya a short time ago, and I asked how many black-white marriages there were. I was told none—

The Temporary Chairman (Mr. Bryant Godman Irvine): Order. I hope that the hon and learned Gentleman will relate his remarks to the Budget statement.

Mr. Paget: I am saying that this is a vanity which is proving exceedingly expensive, Mr. Godman Irvine. I am first indicating that it is an unreality, and I shall very shortly point out how much this unreality costs us. This multiracialism is contrary to our instinct. It is only less contrary to our instinct than it is to the other great member of the Aryan race, the people of India. Our Commonwealth in fact illustrates that multiracialism is not our talent.
As a power grouping, we know that other members of the Commonwealth are nearly always against us. Some of them do not even recognise us. It is simply a balm to our wounded vanity in having lost an Empire, and it is terribly expensive. It has, for instance, pushed us into a policy regarding Rhodesia which is costing our balance of payments, taking copper into account, not less than £150 million a year, for no interest of ours and simply to maintain a fiction. That seems to me to be the second vanity which we must put away, realising that whatever happens in Rhodesia or, indeed, in South Africa we are utterly impotent to interfere.
The third and, perhaps, the most expensive of our vanities is the sterling vanity, the idea that we gain a special position in the world by maintaining our currency as an international reserve currency. Harvard did a research study on the effect on the American economy of maintaining the dollar as a world reserve currency and found that it was a considerable expense and cause of deficit

to the American economy. Yet the American economy has, on average, been able to maintain that position at about 2 per cent. less than we have; we have had to pay, on average, about 2 per cent. more than the Americans in order to attract here the money necessary to support our currency as an international reserve.
Not only have we had to pay these considerable sums, but we have had to maintain our internal borrowing rate at about 6 or 7 per cent. Basically, this is an intolerable charge to put on the user. It is rendered tolerable only by inflation; one pays out in interest and writes off in depreciation of value. What a way to conduct an economy! Interest rates of this kind impose inflation. One cannot do without inflation in such circumstances. This is the cost of keeping our currency as an international reserve.
We must look for a new policy, a policy such as was expressed by my hon. Friend the Member for Ashfield (Mr. Marquand) in a very fine speech last Thursday. There have been many good speeches in this debate, for example, the speech we had a short time ago from my hon. Friend the Member for Birmingham, All Saints (Mr. Walden) and the speech of my hon. Friend the Member for Edmonton (Mr. Albu). All agreed on the need to find a new policy. But I thought the speech of my hon. Friend the Member for Ashfield the best essay on economics, if I may call it that, that I have heard since there has been a Labour Government. In admirable and felicitous phrase, he picked on every real issue. I shall quote one sentence:
That fundamental assumption"—
that is, the fundamental assumption of a Labour Government—
was that it would be possible and desirable to run the economy at capacity, and that if balance of payments difficulties appeared"—

The Temporary Chairman: Order. The hon. and learned Gentleman must not quote directly from a speech already made in this debate.

Mr. Paget: Then I shall try to paraphrase it. My hon. Friend went on to say that if balance of payments difficulties appeared, we would correct those difficulties by other than deflationary methods, which would bring growth to a halt.
That seems to me to be the whole basis and justification of a Labour Government. If we are merely to follow the method of our predecessors, which we have called the stop-go policy, we shall inevitably do it rather worse, for the simple reason that it is a method which depends for its success on the confidence of foreign bankers and the financial advisers of foreign Governments, and those bankers and advisers, from their nature, are inclined to have more confidence in Conservative Governments than in progressive Governments. Therefore, the maintenance of our currency, if that be our basic objective, will always be more expensive for a Government of the Left than for a Government of the Right.
If that be our policy, therefore, we have no business to be a Government at all. It is not to the benefit of the country that we should be. Our whole raison d'être is to have another policy. That policy is the policy of a planned economy, and the basis of all planning must be currency control. We have learned this perfectly well. When planning has really mattered, as it did in two wars, the first thing we did was to put on currency controls. When planning was essential to us, during the Attlee Government, in the recovery from war, we put on currency controls. This must be the basis of any planned advance.
Currency controls mean freezing sterling balances or, as put more politely by the right hon. Member for Barnet (Mr. Maudling) funding sterling balances. Call it what one will, it means introducing regulations to the effect that sterling balances can be used for trade purposes only against trade payments and not for speculative reasons. It means that our industrial activities do not have to be adjusted in order to suit the confidence of alien bankers. It means that we do not have to direct our Budget to them instead of to our real needs, and it means that we can look to the needs of our own economy instead of to the nerves of our creditors. It means many other things. One can get interest rates at a reasonable level, which I would put at about 3 per cent. for a healthy economy. That was the kind of level at which we kept them during two wars when we had currency controls. Of course, it does not mean that one does not have ultimately to balance one's payments; one must do that. But it means that one cannot be placed under constant

pressure, that when one must make the necessary balancing payments one has adequate time to draw on reserves and investments. It is the basis of planning if one is to have a steady advance.
The second thing which I believe we need above all is a real Minister of Economics. Some years ago I was very close to my right hon. Friend the Member for Belper (Mr. George Brown), now the Foreign Secretary. We worked closely for many years on defence policy, and I recall telling him when he was taken out of that sphere on the suggestion that he should become what was then called Shadow Economics Minister, "Don't touch it unless you have a complete guarantee that the Chancellor of the Exchequer will not be in the Cabinet. If the Chancellor is in the Cabinet, you will be a dead duck. With the seniority and power and quality of the Treasury personnel, of the City and of the banks the financial interest will always be dominant in a conflict over the industrial interests". That is exactly what has happened. What we need is a Minister of Finance to whom the Chancellor is one of several subordinates. The Minister can take them to the Cabinet when he chooses, but they will be subordinates because only then will there he a balance of the various interests in the economy and not the financial dominance which we have seen for so long. No healthy business is run by its accountant.
Lastly, we should plan for at least a 4 per cent. growth in the economy, and that can be done if the priorities are right. In wartime we maintained an expansion of, I think, better than 12 per cent. for over five years, in spite of putting 4 million men into the forces. The Iron Curtain countries—the countries of Eastern Europe—averaged better than 10 per cent. in the decade from 1950 to 1960 and are even now still averaging over 6 per cent. I am not saying that we should put our priorities at the level of the Eastern European countries, but if we make our priorities right it is within our capacity to achieve the sort of growth which I suggest. But if we are to do it we must fit the means of exchange, the money, to the plan to expand rather than tailoring expansion to the needs of sterling, which is what we have been doing.
The next thing we should do is quite different from currency control. When we had currency control in both wars we


did not devalue, but controlled the currency at the rate we had chosen. But, at any rate at this stage, we should devalue. I have on balance thought right along that we should devalue, but the argument against devaluing earlier was that there were not the unemployed resources available to be redeployed. If the squeeze has given us anything, it has given us a capacity for redeployment, and I believe that devaluation is the one way in which we shall get the redeployment we need.
Basically the only effect of devaluation is to raise the profit margin on exports. That is really all it does; it does not lower their price, because at least ninetenths of export contracts are in the buyer's currency. If one can get five dollars for a bottle of whisky one will go on getting five dollars for it, even if that five dollars enables one to buy more sterling. One's profit margin goes up, and if one increases that profit margin in exports and by doing so widens the scope of things which it is profitable to export, one will attract to those industries the "slack" which has been created. At the same time one puts a deterrent on importing by increasing the price of imports. But it is a selective deterrent. It is no deterrent upon the import of raw materials required for export industries, because the additional cost there would immediately be absorbed by the larger increase of profit made available by the devaluation. It therefore seems to me that it gives us just what we want both as regards exports and imports.
The effect of devaluation on prices has again been greatly exaggerated. A 10 per cent. depreciation of the currency would mean that the cost of one-fifth of our goods—the amount which we import—would go up by 10 per cent. The overall effect on the cost of living would therefore be 2 per cent. But in practice it would be a good deal less because a good many other countries in the sterling area would devalue with us. It is not the countries to whom one exports that have an inclination to devalue. It is the people from whom one buys who devalue with one because they do not want to be priced out of one's market. Sterling area suppliers of about half our imports would probably devalue with us. I therefore reckon that the direct effect of a 10 per cent. devaluation on internal prices

would be about 1 per cent., which is very insignificant compared with the cost of joining the Common Market, for instance.
When one has a planned increase in productivity, one can begin to have an incomes and prices policy that makes sense. I do not think that it is practical on a national scale to divide income without knowing what it will be. Once the size of one's income is not one's own decision but the decision of foreign bankers as to their confidence in sterling—the decision which throughout the lifetime of our Government and for the past 15 years has always been taken abroad by our creditors—one cannot have an effective plan for dividing it. But when one has an effective decision as to the size of the national product one can begin to have a real incomes plan instead of one which is felt to be, and very often is, merely a polite device for trying to keep wages down. That is what is looks like at the moment.
So far, it seems to me that we have simply followed the Conservative road. We have geared our economy to the pound. This has had the same effect under a Labour Government as it had under a Conservative Government. I believe that we have to find a new policy and that that new policy must be expansion without deflation. This involves the first basic planning decision—currency control.

8.0 p.m.

Mr. Stanley R. McMaster: I hope that the hon. and learned Member for Northampton (Mr. Paget) will forgive me if I do not refer straight away to his speech. I intend to return to it later. It reminded me of the opening speech in this debate by the Chancellor of the Exchequer. I am sure that the hon. and learned Gentleman would be the first to recognise that the weaker one's case is the longer one takes in making it. The hour is late and several hon. Members have sat here throughout the debate. Therefore, I intend to keep my remarks as brief as I can.
I am not surprised at the country's verdict on this Budget. It is a barren Budget. It is a surprise not only to the Committee, but to people throughout the country after the extravagant election


promises made by the Labour Party in 1964 and 1966. It is surprising that after two and a half years in power the Government should be so short of ideas as to bring in this kind of Budget, which does not have one new suggestion in it.
The Labour Government have produced the situation which the country faces today, and it would be wrong of me not to commiserate a little with the Chancellor of the Exchequer. All those who have spoken, particularly his hon. Friends, have been quick to criticise him. But, in the situation produced by the Government, he has shown quite a lot of courage in standing still against the pressure of the trade unions and the imminence of the local authority elections in a way which he felt was right for the good of the country in the mess which the Labour Government have created.
The Minister had the quick will to produce the Green Paper. It does not do anything immediately. It promises that things will be done after it has been properly debated and considered. I wonder how sincere this procedure with the Green Paper is. Is it likely that anyone will say that he is not going to take a refund of £1 or £2 per person employed in productive industry? Why was it necessary to produce this Green Paper? Why could not the ideas in it have been put in the Budget, debated by hon. Members and in the country, and then incorporated in the Finance Bill? To save the face of the Government and to play for time, it was, perhaps, easier to put them in a Green Paper and make great play of having them discussed in the country so that they need not do anything for a further six months.
The President of the Board of Trade, in opening the debate today, referred to the great unemployment that there was in the country. He said that unemployment in the South-East of England and in other parts had increased by 80 or 90 per cent. It was admitted that in some cases it had increased by 200 per cent. It seems that the areas in white in the Green Paper are quickly catching up with the development areas. If unemployment in the Midlands has increased by as much as 200 per cent., why is it net being scheduled as a development area? I assume that it will be soon.
This is the mess which the Government candidly admit they have created. The President of the Board of Trade said that unemployment in the development areas had gone up by only 20 or 30 per cent. What is the use of this plan if the whole country becomes a development area? I am sure that the right hon. Gentleman was sincere when he pointed out the serious situation in the Midlands and the effect of a 200 per cent. increase in unemployment within a year or two.

Mr. Jay: I am sure that the hon. Gentleman is aware that since November unemployment among those temporarily stopped in the West Midlands has fallen by 90 per cent.

Mr. McMaster: I am grateful for that correction. But that still means that unemployment is up by over 100 per cent. on the right hon. Gentleman's own figures, which is a shocking indictment of the Government. The way in which unemployment is fluctuating cannot speak well of the way in which the Government are managing the country.
Why do we need this standstill Budget? Many hon. Members opposite, led by the hon. Member for Edmonton (Mr. Albu), who recently left the Government, have suggested that the £ should be devalued. The hon. and learned Member for Northampton suggested that. Here is more evidence of the defeatist attitude of hon. Members opposite. What would be worse than to devalue the £? We are a trading nation, with most of our debts with a gold clause attached to them, owing millions of pounds abroad. Yet it is suggested that the £ should be devalued so that we have to export more in goods and services to repay those debts. This is a doctrine of defeat if ever there was one.
What the country needs is more rapid growth. Surely it is reflation which we need. We want to get rid of this "Stop-go with Labour". We want to get rid of this restrictive incomes policy, this economic planning which makes a nonsense. The First Secretary of State said very firmly that the stop on wage increases would continue for another six months after July this year. Taken with the year during which there has been wage restraint, this means that there will be an 18 months' delay on wage increases. Then, says the First Secretary of State,


we shall be finished with the control of wages, prices and incomes. But how can he be sure that we shall be rid of control of prices, incomes and wages? How can he say, as he said at the end of his speech, that the period would be strictly limited unless it was based on a forecast?
We know what the forecasts of the Department of Economic Affairs are like. We read its forecasts two years ago when it introduced the National Plan. We know what happened to those forecasts. The Government will find, before the 18 months have run out, that the country is in such a fix that they need to continue with their restrictions and control. The National Plan has been buried, but I do not think that the incomes policy has been buried by the Government.
Many hon. Members opposite have spoken of the mixed economy. Yet, when my hon. Friend the Member for Louth (Sir C. Osborne) was speaking, they could hardly conceal their scorn of the private sector. I am worried by the open antagonism of many hon. Members opposite to the small businesses which have made this country a great country. If they believe in a mixed economy, why should they criticise hon. Members on this side of the Committee when we suggest that taxes are too high? Why should they groan and grumble in their seats and protest? Is deflation the only answer to this country's problems?
The President of the Board of Trade referred favourably to our exports. I know that exports from Northern Ireland are not doing as well as they should. For instance, the ropemakers are facing competition from imports from Portugal, where wage rates are less than half those in this country and children of 14 years of age are employed. These goods are not only taking our markets abroad, but even coming into this country under E.F.T.A. agreements without restriction and it is this type of policy which has produced unemployment in this country. There is a great deal of concealed as well as visible unemployment. Many of our industries are working under par. Many bankruptcies have occurred during the past winter and more are threatened unless immediate steps are taken to reflate the economy.
We have in Northern Ireland found a terrible run-down of our traditional industries. People have moved out of agriculture into the towns. Shipbuilding, in the short period I have been a Member of the House of Commons, has lost more than half of its workers in Northern Ireland, where about 24,000 people were employed in 1959–60. Now there are 12,000, and 12,000 extra men are seeking work elsewhere. The same applies to the linen industry.
These are our three great traditional industries, shipbuilding, agriculture and linen, our traditional productive industries. They have been augmented by new industries moving into Northern Ireland, and which we hoped would have taken up the slack, but not only Short Brothers and Harland but Birmingham Sound Recordings and other small firms have all suffered as a result of Government policies. Some have closed down, others have reduced their staffs. This is a problem which we face in Northern Ireland, and there is no hope of overcoming it unless expansion starts soon.
Why cannot we help to satisfy the demand not only in this country, but elsewhere in the world for the type of consumer goods which are produced by these industries? Why should we not have, first of all, lower interest rates, which would help us to lower the prices of our goods which we export against competition from other countries where interest rates are lower? Why cannot we reduce unit costs by expanding the run of our factories by producing more and by reinflating? The policy of the Government increases unit costs because it decreases production and the total amount produced in our factories.
The President of the Board of Trade made great play with how the development areas would benefit from the Government's plans. We in Northern Ireland had at the end of April, over 8 per cent. unemployed, and that after a comparatively mild winter. I ask hon. Members opposite to consider what it would have been like if we had had a hard winter. We would probably have had over 10 per cent. unemployed. I greatly fear that, unless the Government reverse thir plans, very soon this will be the figure for unemployment in Northern Ireland. I must make it clear that I do not accept the argument of Paish which


has been quoted often during this debate today.
The way out of the troubles of the country are not the ways suggested by the Labour Party, which are totally unproductive. One does not take a 3 per cent. total growth, meaning growth in the gross national product, meaning the sum total of the incomes earned in this country. This does not help. It is by increasing manufacture and output that the country will thrive, by increasing our exports, not just by increasing the gross national product, a meaningless figure, I would suggest. It is not done by increasing the number of unemployed in Northern Ireland and elsewhere so dramatically against the trend in the rest of the country.
I would say, in conclusion, that the sooner the party opposite abandons its policies of deflation and looks for ways of increasing national liquidity, looks for ways of meeting the consumer needs throughout the world for the goods we produce—cars, washing machines, and other durable and non-durable consumer goods—the better. This is a poor Budget. I have not time to develop my reasons, but it gives no help to those with large families and no relief to the unemployed. The Green Paper, whenever it is operated, is not a part of the Budget. I cannot support the Budget, and I hope that when the Finance Bill is introduced the Chancellor will accept some of the Amendments which will be introduced by my right hon. and hon. Friends to correct its omissions.

8.25 p.m.

Mr. John P. Mackintosh: Having listened to the speech by the hon. Member for Belfast, East (Mr. McMaster) and thinking of the speeches of my hon. Friend the Member for Belfast, West (Mr. Fitt), I cannot help wondering what this House would be like if we still had a hundred Irish Members! I was rather impressed by the capacity of the hon. Member for Belfast, East for demanding assurances for encouragement of industry and then spurning the Green Paper proposals which would provide financial encouragement for industry in areas such as that he represents.
However, before I go on to comment on his speech and the speeches of other hon. Members I must first of all say

what a privilege it is to take part in a debate which has been graced by the maiden speech of the hon. Member for Glasgow, Pollok (Mr. Wright), my old friend and academic colleague. I was particularly glad to be here and to listen to what I knew would be an eloquent speech, and I was glad that he broke with the tradition of this Committee that there should be nothing controversial in a maiden speech. I look forward to engaging in controversy with him at other times both here and in the Scottish Committee. In reply to him as an Edinburgh man I remember a newspaper competition in Scotland which offered a first prize of a week's holiday in Glasgow and a second prize of a fortnight's holiday in Glasgow. Nevertheless, the hon. Member overcame these difficulties and I look forward to subsequent arguments with him.
Now I wish to get down to the Budget and the subject of this debate. I am very glad that hon. Members, certainly on this side, have congratulated the Chancellor of the Exchequer on his courage, on the clarity with which he introduced his Budget and the way in which he has been willing to withstand the pressures from all sides. Those of us who, like myself, have been members of the Labour Party for 20 years now, and have followed the career of the Chancellor—albeit from a greater distance away—have no need to be told about his courage and forthrightness in these matters. He is quite prepared, I am sure, to enter into what I think has rightly been a more meaningful debate than these debates have sometimes been, because it has not been a discussion of small tax items, but we have had the chance of looking at the real issues and have been able to spend time looking at the broad strategy of British economic development.
It seem to me that until July, 1966, we had a coherent economic strategy in this country. It was coherent from one Government to another. It was as much the responsibility of the right hon. Member for Barnet (Mr. Maudling) as it was of the Chancellor now on this side of the Committee. We assumed we could run the British economy at capacity; there had to be growth, and we intended to keep up our exports by the process of increasing industrial modernisation and by


becoming more productive. We aimed at ending regional divergences by pushing industry out of the capacity areas, the over-heated areas, into the regions. We felt if there was particular tension in the foreign exchanges we could borrow to get over those immediate difficulties. We had what the Chancellor described as a bonus to this policy in the form of the prices and incomes policy which was to keep down demand to a reasonable level.
It seems to me that at that time there was a coherent policy, and I think everybody in the Committee wishes we had succeeded. We were just very narrowly driven off course in the summer of last year. I have often felt very unhappy on looking back and seeing how very narrow the difference was, how, perhaps, if S.E.T. had had a deflationary effect in April rather than in September, if there had not been a seamen's strike—but for one or two things like that—we should have succeeded.
However, we were forced to take the measures of 20th July last year, and having done this it seems to me the Chancellor's speech now is revealing a new coherence and a new economic strategy, but what bothers me is that it seems to be somewhat obscured by sections of the old strategy, and I am not quite sure that they are compatible. We should have some expansion, but it seems to me clear now that the strategy is first to watch over the balance of payments. Growth comes second. I have heard these noises coming out of the Treasury over the past six months, that we have been trying to grow at too high a rate and that now we must be content to lower the rate of growth. I feel we are also heading towards the assumption that expansion, the slow expansion which the Chancellor has forecast, is to be managed by increasing capacity in such a fashion that it will not cut into a steady level of some 2 per cent. to 2½ per cent. unemployment, an unemployment level which will bolster the otherwise rather limp prices and incomes policy. When this was said, in a brilliant speech, by my hon. Friend the Member for Ashfield (Mr. Marquand), the Chief Secretary to the Treasury said that this was unfair and that the Chancellor had not said precisely that. The Chancellor, in fact, said that the message was clear as regards unemployment—that

such a policy as he was describing in isolation would have no material effect on present employment levels. But he went on to outline four additional points which he felt would reduce unemployment without leading to overheating. What concerns me is that those points seem to be drawn from the old, coherent pre-July 1966 policy, and I am not sure that they will fit into the present strategy.
May I give my reasons? First, it is an assumption of this argument that if we modernise the British economy we shall get growth despite the slow level of expansion—that this can be done by the Prime Minister's productivity conferences, "Little Neddies" and all the other methods which have been tried to bring about modernisation, including special financial incentives to British industry. But can we modernise industry when private investment is down by 10 per cent. and when demand is low? I cannot see this happening.
My impression is that British industry does not invest and modernise at the top of a boom period because profits are then great, industry is producing all out, it has long order books and manufacturers say, "We have no time to stop and re-equip." Equally I do not get the impression that British industry modernises at the bottom of a depression when its confidence is shaken—and the figures of private investment tend to suggest that I am right. We shall not get the modernisation that we want until we have an element of positive growth and expansion, till the upswing has begun and there is much greater confidence than we have at the moment.
Let us take the second point made by the Chancellor which, as a Scottish Member, I welcome—the admirable, exciting idea contained in the Green Paper of a premium for industrial employment in the regions. I wish that I could use my speech to discuss this, because it is one of the best ideas which have been put forward. What troubles me, again, is that those of us in the regions—and I certainly—feel that there is evidence that this regional policy fitted into an economy which was running all out. Then people in Birmingham and London, with a tight labour force and wishing to expand, looked at the regions and contemplated going there.
But if we have slack in the economy overall, who will move into the regions when there is slack in the economy in places where the industries are already established? That seems to me to be the second example of trying to import into the new set of policies, which puts the balance of payments before growth, principles and policies which work well only in the pre-July policy of the previous Chancellor of the Exchequer and my right hon. Friend.
I could give other examples, particularly about the success in the long term of the prices and incomes policy. It seems to me that this success is muted in the sense that it is assisted by the level of unemployment which we are running. I cannot see how we shall get this increasing employment with the policies and the strategy outlined by my right hon. Friend.
May I turn to his own forecast and his own estimates of the short-term and the long-term future? My right hon. Friend's first short-term forecast was that he hoped for 3 per cent. growth this year. Frankly, I was a little puzzled by this. I noticed that my hon. Friend the Member for Edmonton (Mr. Albu) thought that he meant 3 per cent. between now and 1970. Other hon. Members have been quite clear that he meant 3 per cent. this year. But this is taking the last month of last year and the last month of this year, which is not quite right, because growth is normally interpreted by the man in the street as a year-by-year figure, and, in fact, one year following the next, we are not getting a 3 per cent. growth this year. In fact, it will be difficult to get 3 per cent. next year on the assumptions on which we are working.
I appreciate the desire for slow, steady growth in the new situation, but we might not fully achieve even this. There are difficulties about it, because in part it depends on an export-led boom. We can see public investment going up. The Chancellor said that he will rein it in. But there is no evidence that private investment will go up. It seems clear that we are relying for a 3 per cent. growth on an export-led boom which depends on foreign trade which, as several hon. Members have said, depends on conditions outwith our control and which may no longer be favourable. It would be safer if we had some indication that

the Chancellor was prepared to keep in close reserve a possibility of expansion in private investment. This is the key to modernisation and growth, as well as a help to achieving the 3 per cent. growth rate which he has indicated.
May I suggest two possibilities which he might consider? One would be to move forward the date of payment of investment grants. This was suggested by my hon. Friend the Member for Heywood and Royton (Mr. Barnett) and is an entirely admirable idea. At the moment it takes about 15 months between the application for an investment grant and the payment of the grant, and this delay is disastrous to many firms, because they are short of immediate capital. If we move this forward it will cost the Chancellor money, but it would do more than anything else to achieve the investment and modernisation objective. What I should like to see, particularly in the regions, is a position in which the cash investment grant meant what many people thought it would mean—that the price of the machine they bought was 40 or 45 per cent. less, not that they had to pay the full price and then to wait for months, in the most difficult demand conditions and financial conditions, before they received their payment.
Secondly—and I hope that we might get this—we need a firm declaration that we shall join the Common Market. I know that hon Members on both sides of the Committee have argued that this need not produce an immediate rise in demand, but there is a great deal of evidence that industrialists think that this will produce an expanding market. We are dealing in part with psychology. I have said again and again to small industrialists in my constituency, "Britain, under one party or the other, must grow. The public nowadays will not tolerate lack of growth. Any investment you make will pay off. You cannot lose." But they have doubted me. I think that a positive suggestion that we should enter the Common Market would be a great help and encouragement to them in the short term.
Let us assume that, with these extra little assistances, we can achieve the 3 per cent. growth rate which the Chancellor forecast for next year and the year after that. I then turn to a point which bothers many hon. Members on both


sides of the Committee—the long-term situation. I particularly dislike the notion that over the period to 1970, as my hon. Friend the Member for Ashfield said, we can and should run the economy at 2 to 2½ per cent. below capacity. I do not think that the arguments which have been produced suggest that we shall do anything else on the present assumptions. Such a level of unemployment is politically unacceptable. The recent elections showed that. From my point of view it is also socially and morally unacceptable.
We therefore ask how we can get back to capacity growth without bumping up against the balance-of-payments problem right away, without being back in a sterling crisis. It seems to me that in the four days debate we have cut down the alternatives quite clearly. First, we could put on export subsidies to solve the situation. That, however, is prohibited by G.A.T.T. We could impose import quotas, but this would be a hard thing to do just when we are talking about joining the Common Market and liberalising trade. It would shake foreign confidence, lead to rigidity and be heavy in costs of administration. Import quotas are a difficult solution, although they have been considered by right hon. Members opposite at different times in previous stop-go cycles.
We come, therefore, to the remaining possibility of a change in the exchange rate. I have noticed how speaker after speaker, in trying to pursue long-term policies, has been driven in this direction. I do not wish to deploy my arguments on it at the moment. I know that it would increase our debts by £500 million and I know the difficulties involved. Nevertheless, nothing would do so much at this juncture to keep the export-led boom going and enable us to expand to capacity without a balance of payments crisis.

The Chancellor of the Exchequer (Mr. James Callaghan): It would shake foreign confidence.

Mr. Mackintosh: I appreciate that it would shake foreign confidence. There are a lot of arguments, as my right hon. Friend knows only too well. Nevertheless, politics is a question of choice. My right hon. Friend has chosen one thing. I am

suggesting that there are other possibilities which may be more desirable for the long-term objectives of this party.
I agree that many people see the defence of the present exchange rate as going with Britain's policy east of Suez, as going with our special relationship with the United States and the close association between the £ and the dollar and the maintenance of sterling as a reserve currency. I value these things in certain cases but, on the whole, they are far less important to me than maintaining full employment, eradicating regional differences and having sufficient growth to carry through the social programme on which we as a party were elected.
I would much prefer at the end of the five years, whether I am in Parliament or not, to be able to say that we had done something to cut down class barriers and to remove inequality and poverty. In that event, we would have done something more than merely maintaining the £ at its present parity with resulting stagnation and miserable growth in future years. I hope that my right hon. Friend the Chancellor will reconsider his long-term strategy.

8.31 p.m.

Mr. Reginald Maudling: The debate has been marked by two excellent maiden speeches. The first was from the hon. Member for Rhondda, West (Mr. Alec Jones), whose speech, I am sorry to say, I did not hear. I have, however, read it and I was impressed by the clarity of his argument and his obviously close understanding of the needs and interests of his constituents.
I had the pleasure today of listening to my hon. Friend the Member for Glasgow, Pollok (Mr. Wright), who spoke with the lucidity and grace which we all expected from him. I can, I am sure, say of both hon. Members with confidence that we look forward to hearing from them again often. Their Budget speeches will, I suppose, have to be in the House and not in Committee in future. Whether it be in Committee of Ways and Means or in the House, we very much welcome these two new hon. Members and we respect their maiden speeches.
There has been a series of interesting speeches in the debate. I hope, in particular, that the Chancellor of the Exchequer, in winding up, will reply both


to the closely reasoned speech of my hon. Friend the Member for Farnham (Mr. Maurice Macmillan), concerning the invisible income, and also the perceptive speech which we have just heard from the hon. Member for Berwick and East Lothian (Mr. Mackintosh). Apart from that, we cannot claim that this has been an exciting Budget debate. For that the Chancellor must take a certain amount of credit from his opening speech, which was of a rather soporific character.
I know very well that on these occasions it is not easy for a Chancellor of the Exchequer. I remember listening, in 1964, to my own Budget speech and thinking that it was very long and dull. I must confess that the Chancellor this year was both longer and duller. There it is. That may be progress. The speeches made by the right hon. Gentleman's Cabinet colleagues on more than one occasion have not exactly added to the gaiety. I remember hearing the late Oliver Stanley once say that boredom was a Parliamentary weapon which should be sparingly employed. I suggest to Members opposite that they might remember that maxim in future.
I think that much of the criticism of the Chancellor on one point is misplaced. It is unfair of people to blame him for the debacle of last week's municipal elections. The turn in the tide had already started and was reflected clearly in the election results before Budget day. It is also clearly unfair to deprive the Prime Minister of the full credit which he alone deserves for the magnitude of the defeat which his party has suffered.
On the general Budget judgment, it is, I think, agreed that it is difficult to depart far from the view expressed by the Chancellor that something like a neutral Budget in terms of total demand was required. There was a case, as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) pointed out, for a degree of reflation. Our criticism of the Budget, however, rests not so much upon the net addition to spending power as on the way in which the Chancellor went about handling the situation in which he found himself.
A neutral Budget is one thing, but a non-existent Budget is a quite different thing and is totally unjustified, for three reasons: first, because of the level of taxes already reached and the many hun-

dreds of millions of pounds of additional taxation already imposed during the lifetime of the Government. At this level of taxation, any neutral Budget is a severe Budget.
I was surprised to hear the Chancellor in his Budget broadcast say to his interviewer that for the taxpayer this was a good and pleasant Budget. No news was good news, said the Chancellor, for the taxpayer. Is it the Labour Party's point of view that for the taxpayer it is a good thing to have a neutral Budget and that the taxpayer can never look forward to tax reductions after all the additional impost which he is at present facing? The complacency of the Chancellor about the level of taxation is rather remarkable.
The same thing applies to his attitude to the complexity of the tax system which we are now facing. If I make make another quotation from his Budget broadcast, he said:
It is this passion for novelty which has been the cause of a lot of our problems in the past.
The right hon. Gentleman can say that again, with the Corporation Tax, the Capital Gains Tax and the Selective Employment Tax. He has woven round industry a mesh of new, complicated and often absurd taxes on a scale which I should not have thought possible in the short time for which he has been responsible.
The third reason why a non-existent Budget is not acceptable is because he has made no effort to tackle the two great problems which every commentator and every hon. Member recognises as being the most urgent—on the one hand, greater incentives to effort to flagging private investment and the economy generally; on the other, to take care of the problem of family poverty, which weighs in the minds of all hon. Members and which we shall have an opportunity of debating later this week.
So we say that this Budget which makes no changes is, as my right hon. Friend the Member for Bexley (Mr. Heath) said in his first reaction, a Budget of lost opportunity.
Let us look first at the actual Budget judgment and, in particular, at the amount of growth on which the Chancellor bargains. He talks about 3 per cent., but that, apparently, is from end-1966 to end-1967. It is a well known


fact that, if one chooses a low starting point, it is not difficult to make an upward movement. As far as I can see, the actual increase in output between 1966 as a whole and 1967 as a whole on this basis is likely to be less than 1 per cent. For the Chancellor to say that, after two years of virtual stagnation and practically no increase in the gross national product, this 3 per cent. end-year to end-year is all that we can achieve, is a sorry story.
Even this 3 per cent. is difficult to analyse. No doubt the Chancellor has seen the very interesting leading article in the Economist this week pointing out that the figures he quoted about public investment, exports, and so on, account for only £300 to £400 million of additional demand, as against his figure of £1,000 million. Where does the rest come from? Stock building cannot be significant. It must come from increased consumer expenditure.
Hon. Members opposite have been saying, "We are not going to return to another consumer-led boom." But what do the Government anticipate about the growth of consumption this financial year? What do they anticipate about the growth of incomes after July this year? In many ways, it is difficult for Ministers opposite to give concrete figures, but, unless they do, the picture is wholly incomplete. It is no good quoting a figure of 3 per cent. growth over this period and giving some of the factors which will lead to it while ignoring others.
I ask the Chancellor to explain what he meant by this rate of growth, what it meant in total rate of growth between 1966 and 1967, and what proportion he attributes to growth in consumer expenditure.
The real problem of the Chancellor is that he is entering the most difficult phase of the economic cycle, as he must know. The problem of re-expansion is the most difficult one. It is relatively easy in economic terms to improve the balance of payments dramatically by clobbering the home economy. It happened in the past, and was called "stop-go" by right hon. and hon. Members opposite when they were on this side of the House. Now that they are in office, they call it "planning". However, it is the same

process. The difficulty is how to start expansion again without a return to inflation.
The Chancellor is relying on an expansion led by exports and investment, but I doubt whether that is possible on the lines which he envisages. His hon. Friend the Member for Berwick and East Lothian referred, quite rightly, to the slackening in private investment. One cannot expect to see the very necessary and essential growth of private investment unless one sees better market prospects than are available at present.
As the Prime Minister has said often in his moments of illumination, "You can pull a piece of string, but you cannot push it." That is one of his graphic metaphors. This is true of private investment. However much encouragement is given by way of tax incentives, we cannot expect further investment unless there is, first, confidence in the economic management of the country, which is singularly lacking at the moment, and, secondly, the prospect of a reasonably assured market for the fruits of that investment.
I do not see much prospect of the Chancellor realising his growth target this year. In these difficulties, the Government are returning to the old issues about 1964, and the argument that the measures introduced last July were merely dealing with what they called a consumer-led boom in 1964. But the measures last year came about after nearly two years of Labour Government. They came about as a result of the total collapse of the Government's previous incomes policy. To talk about a consumer-led boom in 1964, to talk about an excessive demand in the home market in 1964, is to fly in the face of the facts.
At the time of the 1964 General Election there was no general undue pressure of demand on the economy. Indeed, in their first White Paper the Government said that there was no undue pressure on resources calling for action, and they went on to say, for good measure:
Moreover, the Government reject any policy based on a return to stop-go economics",
but that is probably a little out of date at the moment.
The Government's difficulty, and, of course, the Chancellor's, is partly external, and partly internal, how to get expansion going again at a more satisfactory rate


than the wholly unsatisfactory prospects for 1967 without a return to the balance of payments difficulties of the past. Of course, they need more elbow room in the balance of payments. This means the development of international liquidity policy. The Government need some means of preventing excessive demand outstripping productivity, and it is here that incomes are by far the most important factor, because of the sheer volume of additional purchasing power created by a 1 per cent. increase in the total level of incomes. Finally, and possibly most important, the underlying rate of growth of productivity is a matter on which the Government must keep their minds fixed the entire time, and not let themselves be diverted by short-term considerations.
One of the features of this debate which has struck me most, and disturbed me most, is the constant argument from the other side of the Committee for devaluation. I ask the Chancellor most firmly to reject this prospect and this argument because I believe that the argument for devaluation is based on wholly false premises. I have said in the past that I think there are attractions in the idea of a floating rate as a long-term policy. It enables adjustments to be made in a way that cannot be made now, but that is totally different from the concept of devaluation.
The argument for devaluation is wrong for three reasons. First, devaluation does not allow a higher level of inflation at home, which is what some hon. Gentlemen opposite are asking for. Secondly, we cannot allow spending to exceed earnings, either as a nation or as a Government. Thirdly, I do not believe that it is necessary, as some hon. Members have said, to enable us to join the E.E.C., because I do not believe that there is any evidence that our prices are out of line with those of our competitors, nor is there evidence of a fundamental disequilibrium which alone can justify a devaluation.
On the other hand, if there were a devaluation it would be bound to lead to a great capital loss for this country, a matter which cannot easily be shrugged off. We have to consider the loss which would be involved not only in the gold guaranteed obligations, of which we have

many, but also the obligations which, although not guaranteed, are, to my mind, and, I think, to the Chancellor's mind, too, solemn obligations as well. Secondly, devaluation simply means in terms of exports that although exporting may be easier temporarily, it means exporting more in terms of real resources to get the same amount of foreign exchange.
Thirdly, devaluation is almost certain to set off competitive pressures which mean that the benefits of devaluation when finally realised may be much less than expected, and in the meantime the whole international confidence in currencies may be undermined. From this country's point of view confidence in international currencies remains immensely important, not for any reason of pride or prestige, not because we want the £ to look the dollar in the face, but because we want to see the level of international trade continuing to grow, and because this cannot go on growing unless there is an adequate international monetary system. This means continuing to strengthen the reserve currencies—dollar and sterling. My last argument against devaluation, which appears to be supported by some hon. Members opposite, is that it draws attention away from the real problems by appearing to pose an easy solution.
In the absence of devaluation a number of steps need to be taken, both overseas and at home. I hope that the Chancellor will press on with international liquidity problems. Progress has been made—more than is often recognised—in the enlargement of I.M.F. quotas and the network of swaps, developed from our first swap arrangement with the United States, which is immensely valuable, and the system of offsetting sterling balances withdrawals against help from other countries. These represent a big increase in the available facilities for the financing of international trade and the strengthening of the position of the United Kingdom.
But, alone, they will not be satisfactory, unless we get an overall solution to the international liquidity problem. I hope the Chancellor will not be deterred by the argument that it is impossible to proceed with a new system of liquidity until the deficits of the United States and the United Kingdom have been cured. The argument should run the


other way. We must have a new system available against the time when the American deficit no longer continues to pump spending power into the world market.
As for our position in terms of the overseas account, the Government would be wise to consider other methods temporarily of protecting our economy on our balance of payments. It is clear from our experience that any vigorous expansion is liable to put a short-term drain on the balance of payments, and to deal with that we need reserves to call on. Working capital is a perfectly adequate analogy. We need temporary measures to protect ourselves in the early days of expansion.
Quotas have been mentioned, as have import surcharges, but both have proved wholly unsatisfactory. Quotas are slow in operation and clumsy, and the import surcharge runs into all the difficulties which are now so familiar. I ask the Government once again to look more closely at the system used by the Italians, which is to restrict imports by restricting the volume of import credit permissible in the economy. The Italians have employed this method entirely in accordance with G.A.T.T., and it is also entirely consistent with our system of exchange control. I hope that the Government and the Chancellor will concentrate on these means of fortifying our external position and openly reject the argument of their supporters who speak about the need for devaluation.
I now turn to the question of the home economy. In a phase of re-expansion, the Chancellor will have the problem of keeping incomes in line with the growth of productivity. Any policy for a modern economy must have a means of dealing with this problem. What is misunderstood about the concept of an incomes policy is the reason for it, on one hand, and the limitations on it, on the other. The need for an incomes policy arises from the monopoly position of the trade unions. This is a problem in monopoly. Just as a free economy cannot function properly without some policy on restraint of trade, so it cannot function properly without some policy for incomes.
But this does not mean a policy of statutory control of wages and prices.

We have said time and time again that the Government have made the mistakes, first, of trying to control things in too much detail; secondly, of taking too little responsibility themselves and putting too much responsibility on Mr. Aubrey Jones and his Board; thirdly, of concentrating on prices while costs were rising; and, fourthly—probably the greatest mistake of all—by embarking upon a process of compulsion they were undermining the possibilities of temporary co-operation which are of fundamental importance to the health of this economy.
So we say that the Government's incomes policy has been misguided and ineffective in the past. The mathematics of our economy show that the vast additional taxes which the Chancellor has had to impose in these years have been caused solely by the failure of his own colleagues' incomes policy of that period.
The other thing to remember about an incomes policy is that it cannot work against a background of excess demand, and certainly not against a background of excessively rising Government expenditure. One of the greatest failures of the Budget is the failure to tackle at this stage, when it is necessary and obvious, the problem of the rapid rise in Government expenditure.
Many examples have been given in this debate, for instance, by my hon. Friend the Member for Harwich (Mr. Ridsdale) about the enormous growth of the public services, with the vast expense involved in the additional civil servants and general public servants, which is a matter which, I hope, the Chancellor will not shrug off lightly. About £50 million or £60 million of additional taxes has to pay the salaries of those public servants, although they are no doubt admirable people, which is a formidable matter for any Chancellor to contemplate.
We say that the Government are mistaken in persisting with the indiscriminate distribution of benefits regardless of need. In this way, they have imposed upon the taxpayer an excessive burden or mortgaged money which could be better used for other purposes. Take the example of prescription charges. I imagine that the Chancellor would like that decision to be reversed now. The tens of millions of pounds now being spent on providing free prescriptions for


people who could afford to pay could be devoted either to reducing taxation or to providing a better hospital service.
This is one of the foremost issues on which we fought the elections last week and the verdict of the people on this has been clear and definite and decisive—[HON. MEMBERS: "Rubbish."] Well, a more decisive verdict than that would be very hard to find.
The other opportunity which the Chancellor has missed is that of moving more in the direction of reducing taxation on the profits of industry; in other words, from taxation of profits to taxation of costs. It is generally accepted that what is needed in this country, comparing our tax system with that of our competitors, is a rate of taxation which does not fall so steeply on additional enterprise by companies or additional effort by individuals. The taxation which the present Chancellor has introduced—particularly S.E.T.—does precisely the opposite. It falls irrespective of the efficiency of the company. Indeed, the premium given to manufacturers encourages waste of labour rather than efficiency.
Surely the time has come to try to shift some of the burden of industrial taxation so as to differentiate not between production and distribution, which is nonsense, but between efficiency and inefficiency. As the Joint Under Secretary of State for Economic Affairs said the other day, profit will remain the main yardstick for testing efficiency and the use of capital resources in almost all manufacturing and trading concerns. Surely we should have a system of industrial taxation which rewards efficiency rather than discriminating on a wholly arbitrary basis.
I should have thought that the Committee would agree with the pundit who said:
I have long had the notion that we might be a richer nation if we were able to concentrate our taxation less on industrial profits and more on industrial costs.
That was said by the Prime Minister in July last year, but, although he introduced these admirable sentiments, I see no tendency by the Chancellor to follow them.
One possibility is the T.V.A.—the tax on value added—of which we have heard very little in this discussion, apart from a

passing reference by the Financial Secretary. I know that, at the time of the Richardson Committee, I turned down this idea, because it was then advanced mainly as an export incentive and I still doubt whether it is an effective export incentive.
In view of the rising volume of taxation and Government expenditure in this country, and particularly the prospects of our joining the E.E.C., the time has certainly come to re-examine—and reexamine very urgently indeed—the concept of the T.V.A., not as an export incentive but as a way of readjusting our total tax burden so as to give more encouragement to the more efficient industries and more enterprising individuals.
These are two of the main lines of thought which the Chancellor has neglected in his Budget. He has not made the progress I had hoped he would make in the external sphere and he has not made, within the tax structure at home, those movements which are necessary to encourage greater efficiency and investment in private industry and those movements which are necessary to provide for the cases of family poverty of which hon. Members on both sides of the House are aware and for whom the right hon. Gentleman has as yet been unable to make any additional provision whatever. The problem remains that of the longterm growth of efficiency—the longterm growth of the rate of productivity—and I regret to say that I cannot see any attempt being made by the right hon. Gentleman to tackle this problem.
To briefly sum up, the difficulty lies in the difference between productivity in this country and in the United States. This springs from three causes; first, the wider market enjoyed by American firms; secondly, their greater capital equipment; and, thirdly, their totally different attitude towards management responsibilities. On the first, the wider market, this can come most easily to this country from our joining the E.E.C., and we still await as a matter of urgency, as all industry does, the next step to be taken by the Government in this matter. On the second, the provision of more tools for the individual worker, this depends on there being more encouragement for saving, more encouragement for investment and more recognition of the value


and right of the investor to an adequate and continuing return on his investment.
The third is, perhaps, the most important of all. In considering the position of management, we could make an enormous advance in British productivity simply by improving the quality of our management. This is not to blame management. It is to blame the situation in which management must operate. They have inadequate trained people because although our educational system provides people of the highest quality, it does not provide them in adequate quantity. Nor, under the present Administration, is there any sign of the problem being tackled. Management is hampered all the way along the line by the restrictive attitude of the trade unions, but one cannot see this Government tackling the problem of trade union restrictive practices.
Management is further hampered because in this country success is not applauded, but handicapped. We do not give incentives, opportunities and encouragement to those who provide the leadership in industry. It is not so much the level of taxation itself—which, as we know, is penal—but the attitude of mind that believes it right to impose on leading people in industry penal levels of taxation which are wholly unexampled throughout the Western world.
Unless these problems are tackled vigorously by the Chancellor there will be no possibility of the right hon. Gentleman producing at any time anything but the non-existent Budget which he has produced this year.

8.59 p.m.

The Chancellor of the Exchequer (Mr. James Callaghan): We welcome back the right hon. Member for Barnet (Mr. Maudling) to our economic debates after two years' absence. No doubt, the tissue has grown over the scars, but the memory still remains; and I shall refer to that during my remarks.
We have had an excellent debate and I have enjoyed it. It has highlighted, in the last four days, the economic problems on which many of us must focus our thoughts every day of the year and every hour. I genuinely welcome the reflection of hon. Members on the kind of problems with which we find ourselves having to deal. There is no doubt that there

is very great value indeed in a debate of this sort, both to expose new ideas and, if I may say so, to explode some fashionable fallacies.
The hon. Member for Glasgow, Pollok (Mr. Wright) and my hon. Friend the Member for Rhondda, West (Mr. Alec Jones) both made maiden speeches of very great distinction. The hon. Member for Pollok, with his great by-election victory, can no doubt be forgiven for believing that it marks a turning point in Parliamentary history; I think that most of us thought that of our victories in the past. Although he said that he approached the House with temerity, I must say that I have rarely seen it better disguised with the very considerable artless grace and distinction with which he clothed what he had to say.
The hon. Member for Rhondda, West, is an old friend of mine. We were delighted when he was nominated. We thought that he would get in—[Interruption.] We were shocked at the result. But I think that I can say that the Rhondda and he will be inseparably united for many years to come. He spoke from the depths of a very considerable knowledge of his own valley, and I should like to welcome him to the House tonight.
Let me now come straight to the Budget judgment. The right hon. Member for Barnet, with his usual candour and forthrightness, said that he did not broadly challenge it, and I think that that is generally true throughout the Committee. There has been no general challenge of the nature of the judgment I presented to the Committee last Tuesday. This is also true of the right hon. Member for Enfield, West (Mr. Iain Macleod)—although, because of certain arithmetical discrepancies, it did not quite appear that way in the article he wrote in the newspaper. But, whatever the deficiencies of arithmetic, neither he nor anyone else believes that this is a year in which there should be much change from the general proposition I put to the Committee.
I do want to emphasise, however, what my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) said, because more and more people are coming to recognise the truth of his statement that economic management is a continuous process. One does not set the automatic


pilot on 11th April and then leave the ship to steer itself during the remainder of the year. We must make changes, not according to the calendar—or even according to elections—but according to the needs of the situation.
I would remind the Committee that there has been a continuing process over the last four or five months. In December, there was the two-year increase in investment grants, ending in December, 1968, with the specific intention of encouraging firms to invest straight away. In January, there was a reduction in Bank Rate. In March, there was another reduction in Bank Rate. In February, public expenditure figures were published, and in April the basic decisions on the Budget — one that is not a negative but a very positive decision is not to neutralise rising expenditure by raising taxation. All these are examples of continuing economic management. This Budget takes its place in the development of the economy, and during the coming year I shall make adjustments in fiscal and credit policy, if and when they are required. By their nature, they are not matters of which advance notice can be given.
But the economic result and intention of our policy is a surplus on our balance of payments and a steady run up to a hither rate of growth that we can sustain for a long period. That is the strategy that lies behind what we are doing. It is the Government strategy for the medium term. No one can look too far ahead, with possible changes in relationship with the community or in other ways. It is not possible to do that, but it is possible to look up to 1970, because entry into the Common Market, with transitional arrangements, would mean that there would be no great changes, I would trust, between now and then whatever the date of entry, if it came about.
So it is possible to ask what it is likely to look like between now and 1970, and I agree with my hon. Friends the Members for Ashton-under-Lyne (Mr. Sheldon) and Berwick and East Lothian (Mr. Mackintosh) that the strategy is clear. Anyone can see it, and can understand what we are about or trying to get here. The strategy offers more solid grounds for real expansion than any other policy that has been put forward. The alternatives are, if I may say so, a rag-bag.
We had a very clear statement by the right hon. Member for Barnet on the subject of devaluation. He gave the reasons. I do not propose to spend any time on it because devaluation does not enter into Government thinking as a policy. Therefore, I would be only elevating it to levels which it does not deserve if I were to deal with it in this debate. In my view, it is a flight into escapism. It is something which enables the country temporarily to avoid dealing with the fundamental problems with which the Government, indeed all of us, are struggling.
My hon. Friend the Member for Berwick and East Lothian, in an otherwise remarkable speech, ruled out half a dozen alternatives which he said would interfere with foreign confidence in relation to our entering the Common Market. What does he think this would do to foreign confidence? It is a policy which has no relationship to the kind of approach this country should make, quite apart from whether we would break faith with our creditors. We would still need to take the measures we have taken and to follow them through.
The only thing I am concerned about is that my party, the Committee and the country will get tired of these measures and try to push us into quick-term solutions which will return us to the troubles we have had and turn us from the course we are on. So long as I can, I shall fight for the policies we have laid down.
The growth rate itself can be sustained at 3 per cent., although I say to my hon. Friend the Member for Berwick and East Lothian that is not to say that I am satisfied with a growth rate of 3 per cent. and I hope that no one will be. This is not a figure just plucked out of the air but a careful provisional view of what we can do. I emphasise "provisional" because during the coming months the N.E.D.C. will be examining, in conjunction with the Government, future prospects for growth and the kind of policies we should follow. I do not wish to preempt its final conclusions which will be of great value to the Government.
What this does is to offer a base-line from which we can move. No one will be more delighted than I if we can get a faster rate of growth coupled with a continued and growing balance of payments surplus. I have been asked how


we reached this rate of growth. I was accused last time of reading a very dull economic lecture. This is backed by the best forecast which can be made. It is not based on any increase in the working population. The growth we hope to have will have to come from productivity itself because there will be little increase in the working population between now and 1970. It will have to come from increased output per head.
We have considered the prospects for exports. The trade figures were published after the Budget. The March export figure was a little below that for the first two months but, taking the first quarter as a whole, exports were 7 per cent. higher than the average for the whole of 1966. In the growth figure I have taken 6 per cent. as the increase for exports during the whole of the year. This, as we have secured 7 per cent. in the first quarter, is a pretty realistic figure to start on if we take account of the prospect of an increase in world trade.
We have taken action to reduce Government overseas expenditure. I have taken note of what the effects are likely to be on the balance of payments. Every £1 million saved on overseas Government expenditure enables a greater rate of growth to be achieved in this country. I have taken a view on the flows of outward and inward investment, including North Sea gas. All this is consistent with meeting our obligations and getting a 3 per cent. growth rate.
Now I turn to private investment. Once the economy is on the path of expansion, we calculate that, although private investment will fall this year, it will quickly recover and will be stimulated by the very knowledge of the prospects of a reasonable and sustainable rate of growth.
I say to some of my hon. Friends and to hon. Members opposite that I do not think they have taken enough account of the encouragement given by productive public investment to growth. Fifty per cent. of all investment is in the public sector and a large part of it is productive investment. Manufacturing investment accounts for between 25 and 30 per cent. of total investment. So the very increase in productive public investment itself will be self-generating in other directions.
I doubt very much whether shortage of liquidity is holding up investment now. One of the reasons why I have stimulated savings through the new tax reserve certificate is that I believe companies are likely to be quite liquid during the latter part of this year.
Now I want to deal with keeping the growth rate going. I would not want to neglect any proposals that the right hon. Member for Barnet or anyone else puts forward, but the proposal for prior deposits, which is being run pretty hard, has been tried in a number of countries and eventually abandoned because, although one can control the amount of bank credit that is given to a home importer, what one cannot control is what is put down by the man who is selling import goods in terms of a deposit.
All sorts of arrangements can be made—we have people here who know the City of London very well—and, without going outside the law and the general conditions, I assure the Committee that I have no faith in prior deposits as a system for regulating the growth of imports.
Then there is the increase in incomes as another factor in growth. We have been pressed to say what we think the increase in incomes will be and I will give the figure. It is a difficult thing to do and when hon. Members opposite are so zealous in their pursuit of these forecasts, they should remember that. One of the difficulties of giving a figure is that everyone will assume that they will be entitled to it. Nevertheless, the Committee has pressed for it and the Committee can have it. I will give it as far as I can.
As far as we can see, our estimate is that if we take account of the deferred settlements that have been held up and are likely to come into force, taking a period of 18 months from last July to next December, the increase in wage rates may be about 6 per cent. That is not to say that everyone is entitled to a 6 per cent. increase but that is what we expect it will be under the deferred settlements which are coming about—and millions will benefit from them, which is frequently overlooked. This will be about the increase, overall. This will affect consumer spending because personal incomes will increase.
By taking account of the natural revival that I expect in hire purchase, the expected increase in savings and some rise in imports, I hazard the view that total output will rise by 3 per cent. during the course of the year. That implies a somewhat smaller increase between 1966 and 1957. But, as I said in my sound broadcast, which was said to be wrong but was actually right, we do not measure these things except year by year. Over the next 12 months—say, April to April —I would expect output to grow by 3 per cent. on the previous year, or, taking December, 1967, over December, 1966, I would expect it to have risen by 3 per cent. and for that to be maintained in Vie succeeding years up to 1970.
I hope that that is clear because it is the rate of increase that matters. The point at which one starts is important but it is the rate of increase that matters and, as from this January, I can see it beginning over the year as a whole to increase at the rate of 3 per cent. a year, continuing into later years, and we can get a steady increase along these lines.

Sir Cyril Osborne: rose—

Mr. Callaghan: I hope the hon. Gentleman will excuse me, but I have a lot tc get through.
Whether we can get higher rates depends on making structural changes in the economy, removing the bottlenecks on skilled labour—remembering that the labour force itself will not increase—developing the regions and stimulating productivity. That is work enough to be done.
The Government have offered the basis. We have said that this is what we believe can be done realistically, with a steady rate of growth. As my hon. Friend the Member for Heywood and Royton (Mr. Barnett) said, for people to know that there is likely to be a steady rate of growth is in itself an encouragement to industry, even though people would prefer it to be higher than it is.
We are talking now about the base line of 3 per cent., which means roughly an extra £1,000 million a year in real resources, and when I hear some of the wilder comments which are made I sometimes wonder why it is that 3 per cent. growth means deflation and despair and that 4 per cent. growth means expansion

and exaltation. It is a queer sort of arithmetic which says that we are doing terribly badly if we get 3 per cent. and work for something more, but we are doing very well, and this is in accordance with what right hon. and hon. Gentlemen opposite have said, if we have 4 per cent.
To press the economy forward at a higher rate than its current potential would lead again to a crisis in the balance of payments. To increase the rate of growth beyond what I have laid down as a base line, we must increase the growth potential. There is no way out of that and no short cut. This brings me to the waste of manpower and resources in the regions, and the question I am asked about what we are doing there.
There is a waste of manpower and resources in the regions, in terms of unemployment. I am not very happy about the way in which we focus on a national average rate, whether it be 1 per cent., 1½ per cent., or 2 per cent., because it is misleading without closer examination. It can, and does, conceal, at whatever level the national average rate of unemployment is, great disparities between the regions. These disparities have been and can be disguised by a general reflation for a time until the balance of payments catches up with us again. What we need are structural changes in the economy and in the regions. My hon. Friend the Member for Rhondda, West referred in his maiden speech to the way in which South Wales has been badly hit by the rundown in coal mining, with pit closures, and, of course, there has been redundancy in the steel industry. This is true of Scotland, too.
This need for structural change in the economy of the regions can be papered over for a short time by a general reflation, but the real way in which it must be dealt with is by long-term measures and a combination of measures covering such things as roads, communications, bringing new industries in, and, as my right hon. Friend the President of the Board of Trade pointed out today, help to local authorities and more skilled training.
I invite my hon. Friends who come from these areas to pause and consider. Do they not see evidence of these things being undertaken already? They are


happening. They have not yet resulted in a substantial increase towards full employment in those areas, but these things must be done before the employment will come along. Furthermore, there is the added proposal to make a large subsidy to wages through the selective employment premium. That will have to be discussed, and I shall spend no time on it now. No doubt, we shall have separate discussions. But this is the way to tackle the problem of the overall level of unemployment, not by a general consumer reflation but by dealing with the problems of the regions and making them strong, not by papering over the cracks but by getting down to the fundamental issues.
I must now spend a few moments on the subject of public expenditure and taxation, both of which go together. We have undertaken a further review following that of last summer. It covers all fields of expenditure, and it covers our existing priorities. The hon. Lady the Member for Finchley (Mrs. Thatcher) seemed not to understand what reining back expenditure meant, so I shall explain it to her, if I may.
Public expenditure in all countries, at all times, increases every year. It never declines but always goes ahead, and the only question is the rate at which it increases. By reining back—I take hypothetical figures—I mean this: if it should have been estimated that public expenditure might increase by 10 per cent., reining back would mean that it would increase by something less than 10 per cent.
It does not mean an over-all cut. It means that the rate of growth is not as fast as before. In this process, all expenditure is under review, including home, defence and overseas expenditure. The review will have to take place in time to influence next year's estimates and to ensure that the review's results are reflected in expenditure for next year.
We said that economic recovery would take first place in relation to public expenditure, and if hon. Members have refreshed their minds with Table 12 in the Financial Statement they will have seen the tremendous growth in economic expenditure by this Government, expenditure designed to strengthen our economy.
But let us not overlook the great expansion that has taken place in our social services. I am proud of that, whatever hon. Members opposite may say.
I was a little astonished to hear the hon. Member for Pollok speaking of housing, schools and roads not developing. That is quite untrue, both in Scotland and in England. Housing has increased by 8·5 per cent. per annum every year, including the coming year, and in Scotland the increase is 10·9 per cent. Therefore, it is not housing that has failed to develop in Scotland. Education expenditure has increased by 9·5 per cent. every year from 1964–65 to 1967–68, and in Scotland it has increased by 8·1 per cent. I hope that the electors of Glasgow, Pollok did not elect the hon. Gentleman on the ground that education had not been developing. Health and welfare, including children's services, have expanded by 9·7 per cent. per annum, and in Scotland by 9·8 per cent. That is an increase of nearly 10 per cent. a year, and I hope that some of my hon. Friends take credit for that when they are being attacked by hon. Members opposite.
There is little doubt that in the current wave of feeling sweeping through the country people feel—[HON. MEMBERS: "Oh."]—should we not recognise it and face it? The only thing that we do not intend to do is to be pushed off our course by it. When I am asked about the standard of life of our people, and people feel that it is not improving, let me put this point for consideration. An average increase of 30 per cent. in social expenditure on schools, education, social security, health and welfare and housing must represent an improvement in the standard of life of the people.
The Conservative Party today called for more social benefits and more expenditure at the same time. The hon. Member for Finchley did it.

Mrs. Thatcher: indicated dissent.

Mr. Callaghan: The hon. Lady called for more social benefits and lower expenditure. That is all she wanted. But what a brass neck from a party which wants to increase expenditure all the time—Aden, Malta, the TSR2, and what about that £500 million aircraft carrier the right hon. Gentleman was going to give us? It is a


little absurd to pretend that in this world today one can talk about both increasing expenditure and cutting taxation, but the Conservative Party manage to have it both ways all the time.
I want to say something about rates of taxation, because they have come up more than once. A society must recognise its exceptional people, but they do not work only because of income. If rates of taxation are crippling incentive at the moment it is a little odd that they are now 91 per cent. at the top level, that when the right hon. Gentleman opposite left office they were 89 per cent., and that that has apparently made all the difference between incentive and being crippled.
What is more important is that it is not the marginal rate but the effective rate which matters. We are asking people to accept restraint on their wages at £10 and 12 a week. When we remember that the effective rate of tax on a £15,000 a year man is 53 per cent., this is vastly different from the picture painted so often in this Committee.
The Budget measures have been generally well received in so far as they relate to widows, single women with dependants and relief from the Selective Employment Tax. There is great and general concern about children living in poverty. This arouses very strong emotions. A survey has been conducted by my right hon. Friend the Minister of Social Security. There will be a debate on this topic on Thursday. Poverty among children covers a great many aspects. Those in this group need to be cared for.
There are many groups in this country who need to be cared for. I am very conscious of this. The elderly are writing to me and asking that they should be cared for. We have undertaken a review of priorities which will have to be concluded, and both groups will have to be taken into account in our future financial arrangements. As far as a general increase in family allowances is concerned, to give another 10s. a week would cost £160 million net. That is why it is important that we should be able to deal with poverty where it really exists.
So that Members are not debarred by the terms of the Money Resolution from proposing reliefs from the Selective Employment Tax through refund from Votes, the Government will move a

Money Resolution wide enough to cover refunds of the tax. It follows that it will be unnecessary for Members to propose selective reductions in the rate of the stamp and the general Amendment of the Law Resolution has been drawn to exclude this and certain other types of amendments which can be achieved in other ways.
I conclude by returning to our general strategy. The greatest burden in putting the country right has been borne by the ordinary worker: let there be no doubt about that. The question now is: shall we give a powerful and indiscriminate thrust to demand? This is what the right hon. Member for Barnet did last time. He went to the Conservative Party Conference when he was proceeding on a pretty cautious path and there was a rather ageing Young Conservative there who invented a terrible slogan—"Stop dawdling, Maudling". He is now the hon. Member for Bromley (Mr. Hunt). In my view, that slogan brought its retribution. It was one of the worst which could have been invented.
What did the right hon. Gentleman do? Between that conference and the next Budget he pumped between £500 and £600 million net into the economy. [Interruption.] If I am challenged on that, I will tell the right hon. Gentleman what I said on 14th November, 1963, when I told him of the difficulties which he would be in. I stated:
His answer
to all these difficulties
is that he hopes that sterling will not be an embarrassment. So do I."—[OFFICIAL REPORT, 14th November, 1963; Vol. 684, c. 362.]
With afterthought, I wish that I had put it even stronger. But he put in post-war credits, higher tax allowances, free depreciation, lower Purchase Tax, social benefits, the lot. Two years later we had a record balance of payments deficit, and we had to clear up the mess. The right hon. Gentleman had an ambitious growth target, but he did not strengthen the industrial structure to support it, nor did he act on our overseas position. Indeed, he allowed capital to flow out of the country.
The Government aim not simply at getting the economy on a satisfactory growth path but at keeping it there. Then, as our long-term policies for strengthening


the industrial structure bear fruit, we shall raise it. That is the policy we offer. No other has been put on view.

Question put and agreed to.

Resolution to be reported.

Report to be received Tomorrow; Committee to sit again Tomorrow.

BUSINESS OF THE HOUSE

Ordered,
That the Proceedings on the Motion relating to Finance Bill (Procedure) may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[The Prime Minister.]

FINANCE [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise—

(1) the payment out of moneys provided by Parliament of any increase in the sums so payable under any other Act which is

attributable to any provision of that Act of the present Session—

(a) providing for relief from selective employment tax by way of the payment to employers of amounts not exceeding the amount of that tax paid by them;
(b) increasing by fourpence per gallon the limit of the grants which may be made to operators of bus services under section 92 of the Finance Act 1965, and

(2) any increase in the sums to be issued out of the Consolidated Fund or in the moneys to be raised under the National Loans Act 1939 which is attributable to any provision of the said Act of the present Session increasing the limit in section 2(1) of the Miscellaneous Financial Provisons Act 1950 on the sums which may be advanced to the Exchequer of Northern Ireland by way of loan under that section.—[Mr. MacDermot.]

FINANCE BILL (PROCEDURE)

Ordered,
That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, provision may be made in any Finance Bill of the present Session for increasing the limit in section 2(1) of the Miscellaneous Financial Provisions Act 1950 on the sums which may be advanced to the Exchequer of Northern Irlenad by way of loan under that section.—[The Chancellor of the Exchequer.]

PAY INCREASES (BIRMINGHAM CORPORATION)

9.32 p.m.

Mrs. Margaret Thatcher: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Temporary Restrictions on Pay Increases (20th July 1966 Levels) (No. 5) Order. 1967 1967, No. 424), dated 20th March, 1967, a copy of which was laid before this House on 20th March, be annulled.
This is yet another Order under Part IV of the Prices and Incomes Act, the compulsory part which we have consistently opposed, the part which was to be temporary. This Order concerns 80 employees of the Birmingham Corporation. The facts of the case are as follows. In 1962, Birmingham Corporation asked management consultants for a report on the working of its transport department. That report recommended that an incentive bonus system for manual workers should be adopted. The recommendations were followed, and consequently the department saved a net amount of about £37,000 a year. The success of the scheme was dependent on the quality of supervision, and differentials between the manual workers and supervisors were to be maintained. Consequently, an award was made to the supervisors. During the three years which followed, the differemials between the manual workers and the supervisors narrowed very considerably. I should, perhaps, say that the supervisors had a basic rate of only between £17 and £26 a week. By the time we reached April, 1965, the supervisors' pay in some cases had fallen below that of those they supervised.
This is a typical case of differentials and of the difficulties, in the absence of adequate differentials, of getting people to take on extra responsibility. In April, 1965, therefore, negotiations began between A.S.S.E.T. and Birmingham Corporation and between N.A.L.G.O. and the Corporation to restore the differential. The negotiations began 15 months before the Prime Minister's statement of 20th July. It was admitted that the differentials should be restored. By 20th June, 1965, increased pay was agreed between the Corporation and A.S.S.E.T. and the Corporation and N.A.L.G.O.—that is to say, the pay agreement was concluded

one month before the July statement. It was agreed that it should be back-dated to 10th August, 1965.
At that point in time, just a month before the Prime Minister's statement of 20th July, these people had a vested right to that increased pay, which could amount to as much as £80. At that time they were entitled to this nest egg, and they could have altered their legal position in many ways because they had that vested right. For example, they could have taken on an increased mortgage payment because they were entitled to that back pay and to that increased pay. They could have altered their legal position in many ways because at that stage they assumed that any right which they had would be upheld in a court of law.
On 20th July, 1966, came the Prime Minister's statement, which, in effect, said that they ought not to have that pay in his and the Government's view. We therefore had the position that before 20th July the men said that they had a right to the extra pay, the employers agreed that they had a right to the extra pay, the courts would have upheld that right and did, but the Government said that they could not have it and attempted to move so that they did not get it. The right was, in fact, tested in the courts in a case between Weaving and Birmingham Corporation on 27th February, 1967. The courts upheld the rights of the man concerned and the money was paid. But the Government did not happen to think that a right which had been tested in the courts was enough to prevent them from making an Order countermanding the payment.
May I refer the Parliamentary Secretary to a great dictum of Thomas Erskine, which, I think, has been completely and utterly abandoned. He was later one of Britain's great Lord Chancellors. He said to a jury, in a very famous case:
If I were to ask you, gentlemen of the jury, what is the choicest flower which grows upon the tree of English liberty, you would answer, 'Security under the law'. If I were to ask the whole people of England what return they looked for at the hands of the Government, I should still be answered 'Security under the law'.
That is one thing for which the people cannot look under the present Government. Security under law has gone, and


this case is proof positive of that statement. Thomas Erskine was a great Lord Chancellor, and one would have hoped that the Law Officers of the Government would have attempted to prevent the Government from passing Part IV of the Act, at any rate as it applied to contracts which had already been settled.
On 3rd March, 1967, the First Secretary gave notice that he would make an Order under section 29. Naturally, A.S.S.E.T. and N.A.L.G.O. made representations. He decided that there were no factors causing him to modify his Order, and on 21st March, 1967, the Order took effect. What that Order attempted to do was to establish the Government view that the men should not have had the increase. There was no justification whatever for any Government to go back on a contract which had already been completed and under which the right had vested one month before the statement of 20th July. Therefore, the A.S.S.E.T. and N.A.L.G.O. members had to suffer under the Order.
The effect on N.A.L.G.O. was even more far-reaching than the effect upon the A.S.S.E.T. workers, because in the meantime N.A.L.G.O. workers in other towns had been enjoying the benefit of certain other increases. There had been a 7 per cent. pay increase which had already been deferred under the standstill arrangements, but which had come into operation and became payable on 1st February, 1967. The Order stops that increase as well. Therefore, under the terms of the Order, the Birmingham Corporation employees are not entitled to an increase which is in accord even with Government policy.
Further, it means that under the terms of the Order members of N.A.L.G.O. are not entitled to the increments which they should have got even though it is within the Government's policy to allow increments to go through. The Government have drawn up an Order which not only denies those people the increase to which they were entitled at law and to which the Government objected. It denies them the increase to which other members are entitled—the 7 per cent. N.A.L.G.O. increase—and the incremental increases.
I understand that representations were made to the Government, who in the

first place said that they would look at individual cases. Therefore, the law was displaced by a Government who said, "We might give it back in individual cases." This morning, in the Birmingham Post, there was an article entitled, "Move to annul an 'unfair' pay order", which made it clear that in the case of the officials the Order denies both the increments and the 7 per cent. as well.
I understand that a letter has gone from a Minister to the Town Clerk of Birmingham to say that the 7 per cent. and the incremental increases can be paid. Under the terms of the Order, however, they cannot be paid, because the Order states that no amount over and above that paid immediately before 20th July can be paid. Therefore, in the first case, the Government violated a contract. Then, they made a new Order. Now, they say that the Order can be disregarded if a letter goes from the Government to say so. There is no security under the law under a system like that.
If the Government continue to operate this kind of Order, we shall be praying heaven knows how many times a week for as long as we can see. The Government are absolutely wrong. We believe that the Order was wrong in the first place and that its terms are wrong. We shall vote against it because we are completely against compulsion. We are completely against any Government who gerrymander with the law in this way and think nothing of the liberties of the people.

9.45 p.m.

Mr. Julius Silverman: At the outset, I must declare an interest in this matter, in two respects. First, I am a member of A.S.S.E.T., which is one of the unions involved, and I think that the Order is a bad one and would have been a bad one whatever union was involved. Secondly, some of the people involved are my constituents, and, they have been dealt with harshly, unfairly and unreasonably.
The hon. Member for Finchley (Mrs. Thatcher) has set out some of the circumstances and history of the case. I believe that this is about the tenth Order which has been introduced in the House. I find it difficult to understand why the Government continue to introduce these


Orders. In all, they affect a few hundred workers. If the Government had not taken these measures, involving only a few hundred men, I do not believe that the prices and incomes policy would have been affected. Having examined most of the Orders which have been introduced—

Mr. Speaker: Order. The hon. Gentleman must speak only about this Order.

Mr. Silverman: Mr. Speaker, I am speaking about this Order. However, I must consider it in relation to the Government's prices and incomes policy, because the Order is part and parcel of it and of the Act under which it is introduced—

Mr. Speaker: Order. I hope that the hon. Gentleman will not think the Chair unreasonable, but we cannot discuss the Government's prices and incomes policy on this Order, except in so far as it is exemplified by the Order.

Mr. Silverman: Mr. Speaker, I am quite sure that you would not be unreasonable. I have never found you so. All that I am trying to do is to consider the Order precisely in relation to the Act under which it is made, in relation to Part IV, and in relation to the Government's policy.
The present Order affects about 60 people, and all the Orders introduced up to now affect only a few hundred people. For the most part, these measures have no merit, and I cannot believe that to take them against a few hundred people will threaten the existence or implernentation of the Government's prices and incomes policy. Nor do I believe what is urged, that if these men are not treated in this way other people whose wages are restrained will feel a sense of injustice.
It cannot affect other people to implement a contract which was made well before Part IV was conceived. It was already agreed in August, 1965, that the settlement which was eventually arrived at between A.S.S.E.T., N.A.L.G.O. and the Birmingham Corporation should be retrospective and should apply as far back as August, 1965, which was almost a year before the freeze came into operation.
In view of the Government's Order, after the legal decision of the courts was

made, Birmingham Corporation decided to dock these people's wages during the period between August, 1965, and January, 1966. That was a period well outside the freeze and well outside the operation of Part 1V. The result is that their wages have been reduced for a period nearly six months before Part IV came into operation. This shows the complete illogicality and unreasonableness of this Order and applying it to cases of this character.
It was contemplated this this agreement, which nobody can say was not a fair and rasonable one, should operate from 10th August, 1965. I agree with the hon. Lady when she says that these men based their calculations, their commitments, and their cost of living on an agreement which it was expected would operate in August.
There is another factor on which must comment. It is true that the Birmingham Corporation was prepared eventually to pay up, but it was not prepared to do so in the first place. When the Government announced their policy, the Tory-controlled Birmingham Corporation said, "We will be patriotic. We will co-operate with the Government and see that nobody in our employment gets a rise", but when it was suggested that the rents of Corporation houses should also be restrained, the Corporation said "No". It was suggested that the Corporation should freeze the rents of its houses, but it said that it could not do that.

Sir Douglas Glover: On a point of order. Are we, on this Order, entitled to discuss the whole question of rents in Birmingham?

Mr. Ian Mikardo: Further to that point of order. This Order arises out of a case in the courts. The plaintiff in that case was a tenant of Birmingham Corporation. His circumstances must, therefore, be relevant to the matter before us tonight.

Mr. Speaker: Order. It is only relevant if he is one of the men affected by this Order.

Mr. Silverman: I was about to say that Mr. Weaving, in respect of whom the court case arose, was a council tenant, and I have received many letters not only from him, but from other people


concerned with this Order who are also council tenants. Some of them reside in my constituency, and they are faced with the position that their wages have been frozen, but their rents have been increased by 11s. In these circumstances, one can appreciate that they are suffering from a burning sense of injustice. They believe that they are being cheated by the Birmingham Corporation.
They cannot understand why the Government are prepared to take measures which affect a few hundred men, and in some cases only 20 men, and in this case only 60 men, while they are not prepared to take action against an increase in the cost of living which involves 100,000 people.

Mr. Speaker: Order. This is quite out of order. The hon. Member must come back to the Order.

Mr. Silverman: I would not have raised this matter except that it applies to some of the men dealt with by this Order, and this issue is, therefore, relevant to my case.

Sir Harmar Nicholls: I am a little confused now. Do I take it that the hon. Gentleman is opposing the Order which inflicts an injustice on these men, or is he opposing the Tory-controlled Birmingham Corporation? At the moment, we are discussing an Order. I am trying to follow what the hon. Gentleman is saying. I have a great deal of sympathy for the case he is making. Is he criticising and objecting to this Order, which has been issued by his Government?

Mr. Silverman: If the hon. Member had listened he would have heard me say that this is a bad Order which I do not propose to support. I emphasise things as I choose and not as the hon. Member thinks fit. In this case, there is not the slightest doubt that the Tory-controlled Birmingham Corporation deserves—

Mr. Speaker: Order. The hon. Member must not be tempted to stray out of order again.

Mr. Silverman: I should not have been tempted but for the intervention, Mr. Speaker.
One of the problems is that too many people believe that this is symptomatic of the Government's policy in respect of the element of compulsion—that while the Government are prepared to introduce Orders imposing restraints on various sections of the workers they are not prepared to do the same in respect of prices—

Mr. Speaker: The hon. Member must take note of what the Chair says. We are discussing an Order. The rules of the House in connection with the discussion of a Statutory Instrument like this are very formal and formidable. The hon. Member must conform to them.

Mr. Silverman: I am trying to keep within the rules of order. I cannot take the Order in complete isolation from the rest of what is happening.

Mr. Speaker: I am trying to help the hon. Member. He may discuss the rest of what is happening on another occasion.

Mr. Silverman: What I have said about other matters I have said in passing. I believe that this is a bad Order. I find difficulty in discussing the question of what is happening to wages in complete isolation from what is happening to dividends, incomes and prices. Those are not the subjects of my speech, but they are connected with the subject matter of the Order. I mention them only in passing. But in deference to you, Mr. Speaker, I shall not pursue that aspect.
I hope that the Minister will tell me something about the 7 per cent. Was the question overlooked by the Ministry when the Order was formulated? If the Order is so ill-digested as it appears to be cannot it be withdrawn? Has the Minister authority to withdraw it and reconsider the situation? If this Order had not been made would there have been statutory authority under the Act for the payment of this 7 per cent.?
People feel aggrieved. They wonder whether this is a vindictive action by the Government. I do not believe that it is. It is probably a mess-up or a mistake. If it is a mistake, and the Order has been misconceived, it may still not be too late for the Government to reconsider the position and to withdraw it.
The men affected by the Order feel cheated and wronged. If the Government wish their prices and incomes policy to operate it will have to be accepted by the people concerned as reasonable and fair. This is a bad Order which gives little augury of success for the Government's prices and incomes policy after 20th July. I therefore ask the Government, even at this late stage, to reconsider the Order and whether they must proceed with it. I ask them to withdraw it.

10.0 p.m.

Mr. Reginald Eyre: At this late hour I shall speak only briefly. I rely upon the account of the facts as given by my hon. Friend the Member for Finchley (Mrs. Thatcher). I would also accept the version of the facts given by the hon. Member for Birmingham, Aston (Mr. Julius Silverman). I would differ with him on what he said about the rents policy, which he related to the Order. Birmingham Corporation's rents policy accorded with the Government's prices and incomes policy as subsequently published. I emphasise to the Parliamentary Secretary the strong sense of bitterness and unfairness felt by these men, and their skill and responsibility. Every one of them has risen from the ranks of the manual workers. Their skill entitled them to their special responsibility and it is unfair to treat them in this way.
They have lost their plussage, which was intended to compensate them for the percentage bonuses which the manual workers have been receiving since 1961. With the special responsibility of supervising craftsmen, they naturally expect their position to be kept proportionately fair. They have also lost the 7 per cent. increase, even though it is permitted by Government policy, and their increments.
It would not be enough for the hon. Gentleman to offer to restore the 7 per cent. and the increments. I want him to agree to forget about recouping any arrears from sums paid to these men under a court order. The Parliamentary Secretary has said on previous similar occasions that the Government's best legal advice is that arrears like this would not be recoverable. The special meanness and vindictiveness of the Order is that it specially prejudices the senior men, superintendents of larger garages, who

are paid little enough for their responsibility at £1,340.
If the Government do not forget about it there will be serious bitterness which will prejudice the running of Birmingham's city transport. These men's skill, knowledge and experience would enable them to move to other jobs often at much better pay in a city like Birmingham. The hon. Gentleman knows the importance of their job and will recognise their skill and responsibility. I hope that he will clear away the mistakes of the past and treat them fairly and justly.

10.4 p.m.

Mr. Harold Gorden: It is a pity that the otherwise good speech of the hon. Member for Birmingham, Aston (Mr. Julius Silverman) was marred by sneering at the Birmingham City Corporation, when we are supposed to be discussing the Order. The Corporation obeyed this Order. There have always been good relations between the Corporation and its employees and everything said tonight shows that the negotiations were fair and reasonable on both sides. It is a pity that the Government interfered with such good relations that had existed between this Corporation and its employees.
As has been said, the retrospective effect of this Order is particularly serious. I should have thought, from what my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) said, that we soon will not be sure whether we are Praying against an Order or a letter from a Minister. I am equally not certain whether it is fortuitous that the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) finds himself on the Front Bench to reply to this debate. He is, no doubt, well informed on this subject, of what I have said in the past, and aware of the good relations that have existed between employer and employed in Birmingham. Perhaps it would have been better had the Government placed a different Minister on the Front Bench to answer the debate. However, it is to be hoped that the Parliamentary Secretary will have some good news for us tonight, even if it is to tell us that another letter will be going out from the Minister.
This situation cannot go on. The Government are picking out a very small


number of people for treatment which they ill deserve. I trust that careful note will be taken of what is being said tonight.

10.7 p.m.

Mr. Russell Kerr: I support the remarks of my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) and oppose this Order, which—along with an Order made recently in respect of the limb fitters of Roehampton—is possibly among the least defensible of the indefensible Orders made by the Government under the Prices and Incomes Act, a Measure which was conceived in sin and nurtured in folly.
I have an interest to declare in that, like my hon. Friend the Member for Aston, I am a member of A.S.S.E.T.

Mr. Mikardo: So is the Parliamentary Secretary.

Mr. Kerr: And I gather that a number of other hon. Members are members of A.S.S.E.T., too. I am a member of the national executive of that Association.
I take up the historical background to this matter which was outlined in an entertaining way by the hon. Lady the Member for Finchley (Mrs. Thatcher). The history goes back to the early part of 1962, when Birmingham Corporation's transport department, after an extensive survey by a work study team, introduced an incentive bonus scheme applicable to manual workers which was designed to increase the productivity of groups of workers through a reduction in the numbers employed, such a reduction being based on the anticipated natural wastage of workers who would not be replaced upon retirement.
On 17th April, 1962, A.S.S.E.T. requested information about the manner in which it was proposed to compensate the supervisory staff for the additional effort that they would be required to make following the introduction of the scheme. This was followed by discussions, but there was no definite outcome and the Association therefore made formal application—that was on 18th September, 1962—for a compensatory payment for supervisors.
On 12th December, 1962, the general manager informed A.S.S.E.T. that the Establishments Committee had approved, as an interim measure, that engineering foremen should have a £50 plusage on their annual salaries to take effect from 1st April, 1962. This was granted, but pending further examination of the introduction of a bonus scheme for foremen.
The next stage was that lengthy negotiations ensued on the question of an incentive bonus scheme for these employees. Eventually, agreement was reached in November, 1962, to the effect that the temporary plusage of £50 be revised to 15 per cent. of the basic salary. On 15th April, 1965, a claim for improvement in the plus payment was made. On 10th August, 1965 a decision was taken in negotiation that there would be further discussions between representatives of the unions and of the Transport and Establishment Committees with a view to devising an incentive bonus scheme, and an undertaking was given by management that any agreed scheme should be effective from a date not later than 10th August, 1965.
Further negotiations took place, and eventually the general manager submitted proposals, which were dated 3rd May, 1966. These were accepted on 13th June of the same year and on 13th July, 1966, the Association requested information as to when the agreed new scales would be implemented. On 18th July, 1966, the general manager stated that every effort was being made to include the agreed increases in the August salaries. On 10th August of the same year the general manager intimated that, owing to the terms of the Government's White Paper on Prices and Incomes, it did not seem possible to implement the increases in the percentage plus payment to non-manual staffs in the transport department.
As will be seen from this short history of events, the agreement on percentage plus payment had been won only after several years of bargaining. In the meantime, the members concerned had been performing the additional duties required of them. Birmingham Corporation itself appears to have recognised this, because the agreement, when reached, had retrospective effect to August, 1965. During the whole of this period the differentials were unsatisfactory. Acting on behalf of its members, the Association


accordingly refused to waive the members' rights under the agreement. Proceedings were therefore commenced in the Birmingham County Court on behalf of A.S.S.E.T. member, Mr. Frank Weaving, for money due under contract.
Early in 1967, the Birmingham Corporation announced that it had decided to pay all the money owing to the members under the agreement, backdated to 10th February, 1966, so that members would lose money for the period from August, 1965 to February, 1966, despite the fact that this was outside the period of the salary standstill.
It was decided, therefore, to proceed to the county court on the claim that this six months' pay had been arbitrarily withheld in defiance of the agreement. As many hon. Members will know, the case was heard in the Birmingham County Court on Monday, 27th February, 1967, and the judge decided in favour of Mr. Weaving and ordered the Corporation to pay the costs of the action.
One can only express surprise that the First Secretary should have considered making an Order in a case like this. In the first place, the frozen six months' payment for which Mr. Weaving successfully sued, related to a period prior entirely to the period either of standstill or of severe restraint. A judgment has been given that the Birmingham Corporation is due to pay these amounts, and the Corporation has 28 days in which to appeal if it so wishes.
Secondly, according to the White Paper, during the period of severe restraint employers are advised to honour exiting commitments. An Order, if applied, would prevent the employer from doing so in this case. Thirdly, there is in existence a national wage agreement covering all local government staff, which was negotiated through the National Joint Council for Local Government Services and which provided for two national increases, one in August, 1965, and another in August of last year.
There has already been a deferment of six months in respect of the national agreement increase due in August, 1966, and the Corporation has just begun to pay this following the six months delay. It appears that an Order under Section 29 would have the effect of halting this increase which is due under the percen-

tage plus scheme despite the fact that there has already been a six months' deferment. This, of course, would be grossly unfair and would be interpreted by A.S.S.E.T. members as a vindictive action. If the Order had the effect of causing the Corporation to withdraw the increase, A.S.S.E.T. would have no alternative but to return to the county court and sue for the six months already lost.
Finally, a word about the pay of these employees. The work they perform is responsible and calls for considerable experience of their trade in addition to supervisory skills, yet their salaries range from £800 per annum to £1,340 as a ceiling for a superintendent. Our members of A.S.S.E.T. total a few more than 60. It can hardly be argued that the national interest would be injured if a few employees were allowed to enjoy the benefits of an agreement which took so long to negotiate and the effective date of which was 11 months prior to 20th July, 1966.
Moreover, Birmingham Corporation, while wishing to support Government policy as it sees it, did not feel so inclined over the matter of municipal rents.

Mr. Eyre: Would not the hon. Member agree with the Birmingham Corporation policy on rents?

Mr. Speaker: Order. The hon. Member for Birmingham, Hall Green (Mr. Eyre) must not ask the hon. Member for Feltham (Mr. Russell Kerr) to agree, because if he agrees or disagrees he will be out of order whatever he says.

Mr. Kerr: I regret not having the opportunity to answer the hon. Member. The Corporation did not feel so inclined on the matter of municipal rents—

Mr. Speaker: Order. No further reference to rents, please.

Mr. Kerr: Despite recommendations made by the Minister of Housing and Local Government to the contrary—although I must not say this—the Corporation increased the rents of its tenants. As previously mentioned, one of these was our good friend and A.S.S.E.T. member, Mr. Weaving, whose rent was—I am quite out of order in


saying it—increased by 11s. a week at the same time.
For all these reasons, I submit that this is a very ill-considered and ill-advised Order. I regret, and I say it with a heavy heart, that I for one will not find myself able to support the Government in the Division Lobby tonight.

10.18 p.m.

Mr. Charles Fletcher Cooke: Once again, I must ask the Parliamentary Secretary to address his mind to what will happen when this Order expires in two or three months' time. This is for the third time of asking. On each occasion when we have had one of these Orders the Parliamentary Secretary has asked me to wait until, first, one statement was made about Government intentions, and I waited for that, and then to wait for the second stage of the Government's announcement, which was made today. I am hoping now that I shall not be asked to wait for yet a third occasion, for that would be too much.
There are, as I said before, three possibilities about the exact nature of this Order as it affects existing applications. The parent Act says quite clearly that this money shall not be paid. It does not say that the debt or obligation is extinguished for all time, although I know the Parliamentary Secretary has taken legal advice and come to the conclusion that that is the case. I ask him to reflect on the similar wording in the trading with the enemy legislation. This is a very similar state of affairs. One cannot pay the enemy during wartime, but that does not extinguish one's obligation and the custodian of enemy property usually makes one pay one's debt into a blocked account.
So if the hon. Gentleman compares the wording in this case he will see that, even on that interpretation, it is not beyond a peradventure. If that may be right, it should be settled, and the hon. Gentleman should say definitely one way or the other, otherwise Birmingham Corporation may not be putting aside, as it should, money to meet existing obligations in that way.

Mr. Mikardo: Does not the hon. and learned Gentleman agree that the final issue in this situation is that it is not

for the Joint Parliamentary Secretary to say one way or the other, but that a further reference to the courts after expiry will settle the matter? Is it not possible, irrespective of the advice my hon. Friend has had, that the Government may find themselves with another shock on their hands from the courts?

Mr. Fletcher-Cooke: I do not disagree with that, coming from another member of A.S.S.E.T., a distinguished member who is obviously sharpening his legal weapons for another battle.

Mr. Mikardo: Right.

Mr. Fletcher-Cooke: Assuming that my proposition is wrong, there are two other possibilities, and they are very relevant. They are not just hypothetical and here the Joint Parliamentary Secretary must give us some indication. Is it the view of the Government and their Law Officers that these obligations, so laboriously negotiated, have been killed permanently by the Order and are not revived in any way even in the future by expiry of the Order? Or is it the view that, when the Order expires, say, on 1st August or whatever the right date is, from that date onwards Birmingham Corporation can pay these plussages and all the other things we are discussing?
These two are fairly stark and reasonable alternatives to put to the hon. Gentleman. When I put them on the last occasion, he said that we would have a statement that would take care of the point. I listened carefully to today's statement and it did not seem to me that the point was taken care of at all. Perhaps he will take care of it now.

10.22 p.m.

Mr. Eric Lubbock: After looking at Section 29 of the Prices and Incomes Act while the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) was speaking, I would advise the members of the Birmingham Corporation transport department who are affected by the Order that, when the period expires, they can not only claim the increases to which they would have become entitled had it not been enforced but can claim back payment for the whole period to August, 1965, when the claim was first intended to come into operation if the agreement made in July had gone through.
Section 29(4) of the Act only says that
An employer shall not pay remuneration to which this section applies for work for any period while the Order is in force …
So, as soon as the Order has expired, I have no doubt that the 60 people affected by it will feel inclined to take legal action on the advice, perhaps, of the hon. Member for Poplar (Mr. Mikardo) and recover the amount which they have lost during this period.

Sir Harmar Nicholls: This is the fourth speech we have heard. The main burden of the points put are based on legal interpretation by the Government. Should we not all ask for a Law Officer to be present, so that we may feel that the points can be properly considered?

Mr. Lubbock: That is a good suggestion.
It may well be that the reluctance of the Joint Parliamentary Secretary to answer the questions put previously by the hon. and learned Member for Darwen is because he knows what the answer is and is not eager to disclose it to people who have been affected by previous Orders and are affected by this one. He may not be disclosing the answer because he knows that every one of these Orders is piling up trouble for the Government during the period after the freeze ends. I am glad that that is so. I object strongly to this Order and to the others that we have discussed. But this one is perhaps the most objectionable of all since the Prices and Incomes Act came into force.
Perhaps I should declare that I, too, am a member of A.S.S.E.T. But I hope that my views on the Order are in no way coloured by knowledge that members of my union are affected by it. I should be just as strongly against it were the persons affected members of any other union.
I am delighted that the hon. Lady the Member for Finchley (Mrs. Thatcher) brought the letter to the Town Clerk of Birmingham to light. I hope that the Parliamentary Secretary will describe its contents in some detail. The hon. Lady put her finger on a defect in Section 29 of the Prices and Incomes Act. In Section 29(4), it is provided that one must not pay remuneration at a rate higher

than that which obtained before 20th July, 1966, unless
the appropriate Minister has given his consent in writing to an excess of that amount or of a greater amount …
The Minister is entitled under the Act, therefore, to write to the Birmingham Corporation and say that it may pay increases which have since come into effect other than the one which has been claimed by the members affected by the Order.
What is highly unsatisfactory, however, is that the House has no knowledge of the contents of this letter, unless the Parliamentary Secretary deigns to explain it later. If the House is to debate this matter properly, not only should we have copies of the Order in the Vote Office but we should have copies of any letter which the Parliamentary Secretary has written to the Birmingham Corporation. It is monstrous that we should have to depend on the diligent researches of the hon. Lady, although I am delighted that she has revealed the matter to the House before it is too late, giving the Parliamentary Secretary an opportunity to reply when he winds up the debate.
If the Government are to use this piece of machinery under Section 29(4), they have an obligation to see that all the facts are laid before the House when it debates Orders such as this. It could easily happen—I do not suggest that it will in this case—that the view which hon. Members take of an Order would be coloured by any variation of the levels which operated before 20th July last that were put to the employers in a letter. The Parliamentary Secretary would do well to bear this in mind if there are to be more such Orders put to the House before the Summer Recess.
I agree with those who have spoken in the debate so far that it is utterly wrong and unfair that we should spend a lot of our time here in Parliament discussing the affairs of 60 people. Why should it be that many people who are granted increases by their employers without knowledge of the matter coming to light can get away with it? The Parliamentary Secretary knows very well that this is so. If an employer does not choose to make a song and dance about an agreement which he has reached with his staff, the hon. Gentleman has no knowledge of it and people get away with it.

Mr. Mikardo: The overwhelming majority of the many cases to which the hon. Gentleman refers, when the thing does not come to light and people get their increases without interference, are of workers who do not belong to trade unions. It follows, therefore, that what the Government are up to is giving an enormous incentive to workers to stay out of trade unions, a strange posture for a Labour Government.

Mr. Lubbock: Perhaps that is what the Government want. They seem to be more anti-trade union even than their Tory predecessors. I agree that this is one of the effects of the present prices and incomes policy.
With this Order, we are considering a Corporation whose employers are members of trade unions, so that any increases paid to them come to light almost automatically. I understand that in this case it was Birmingham Corporation which drew the Government's attention to the fact that these increases were being demanded by its transport department supervisors.
Then there is the vast number of employees who, as the hon. Gentleman says, are not members of trade unions and who ask the bosses for a small rise, saying, "If you do not tell the Government about this they need never know", and the employers connive at that breach of the prices and incomes policy.

Mr. Speaker: Order. The hon. Gentleman is entering into discussion on the prices and incomes policy. He knows that he must return to the Order.

Mr. Lubbock: Yes, Mr. Speaker. I would not wish to depart from the Order in any way.
I was only pointing to that disparity and the enormous gap in the Government's prices and incomes policy to contrast the position of these 60 workers with those of their many thousands of fellows who are not affected by the Prices and Incomes Act, and saying that that is why I consider that Orders of this kind which apply to only 60 workers are so monstrously unfair and unequal in their effect.
Here we have not only an agreement freely arrived at between employers and workers in the transport department, but one that has since been reinforced by a

decision of the courts. I absolutely agree with every word the hon. Member for Finchley said. It is a sorry day for the country when Parliament can overturn not only agreements freely arrived at between trade unions and managements, but the decisions of the highest courts in the land.

10.31 p.m.

Mr. Eric S. Heffer: It is very welcome to have the hon. Member for Orpington (Mr. Lubbock) speaking on this subject. I understand that this is the first time the Liberals have appeared on this question. Most of us are rather familiar with each other on these Orders, and it is very welcome that they have added their voice on these questions.

Mr. Stanley Orme: I wonder why.

Mr. Heffer: I am very much opposed to the Order because, having been a member of an establishment committee in Liverpool, I fully understand the tortuous negotiations and discussions that go on before local authority workers can arrive at their awards. I can understand the fact of 11 months having elapsed. We all know what happens—the passenger transport committee discusses the matter first. Then it says that the matter is not finally for it and that it must place it before the establishment committee. That committee then possibly wants to see representatives of A.S.S.E.T. or N.A.L.G.O. A number of people discuss the matter, which then goes back for further negotiations and discussions and ultimately, after a long period, it comes before the city council, which finally ratifies the decision.
In the meantime, that group of workers is patiently waiting for the negotiations to go through that tortuous, lengthy process. The workers naturally think that at the end of the day it will all be worth while, because they think that they will receive additional money for the responsibility they carry. The individual worker thinks, "I shall be able to get that new television set I was thinking of getting. Perhaps my wife will be able to buy the couple of new dresses she wanted. Perhaps the children can have some more shoes, or I may even be able to put down the deposit on a car."
I can understand the feelings of those workers when, after the lengthy negotiations of 11 months, the matter was finally settled one month before 20th July, and they were told that they could not receive the increased payments because of the Government's prices and incomes policy. How would we feel? I can fully appreciate the bitterness that those workers must feel and the anger and antagonism they have to the policy which has caught them in its net. This is a very serious situation.
I can understand the position of these supervisors for another reason. On many occasions I have helped to negotiate bonus and productivity agreements. The problem always is to make certain that the supervisory staff are an essential part of the productivity agreement which is reached. They are always an important part of the productivity agreement. Otherwise, one gets the position that the workers who carry out the manual tasks are able to increase their productivity and, therefore, increase their remuneration, but the supervisor, if he is not part of the agreement, naturally remains at the same level of pay and the men on the shop floor come up almost to his level.
It also means that if the supervisor is not involved in the agreement, after a time the agreement fails in any event because the supervisor has no interest in assisting in the productivity because he is not participating in the increase. The hon. Lady the Member for Finchley (Mrs. Thatcher) said that Birmingham Corporation had saved a considerable amount of money as a result of the productivity agreement which was finally introduced. I would add that it was a Labour administration at that time which was far-seeing enough to introduce that sort of productivity agreement.
The supervisors are assisting in the productivity, helping to save money for the Corporation and, at the same time, ensuring that the workers' wages increase in the productivity arrangements. All the time that this is going on, the one thing which sustains them is the knowledge that their two unions are now involved in negotiations which will lead them ultimately to extra plussage payments because they are not actually part of the productivity arrangements.
I can understand the bitterness of these men when, despite their added responsibility and their assistance to make the scheme work, they finally reach the situation that they will not get the increased payment which has been properly negotiated by the trade unions and the Corporation over a period of eleven months.
It is because I have a lot of experience in these matters that I am opposed to this type of Order which is being introduced into the House of Commons. The only good thing about this, if there is any good thing, is that for the first time, possibly, many hon. Members opposite, and, I hope, some of my hon. Friends on this side, are now beginning to learn about differentials, plussage rates and what tradesmen actually do, which they never knew about before. That is a positive gain to our society as a whole. I would, however, prefer them to have learnt it in other ways. It would have been far better to have learnt this without discussing Orders of this sort.
We often hear talk about rogue elephants. I suppose these supervisors are not the most militant of men. I have never yet found them to be so. After all, there is an old saying that if a man keeps his nose clean he may get up the ladder, but if he is militant he might get the sack. Normally, supervisors are not the most militant of men, and yet these, I assume, are the rogue elephants. It is ridiculous to think that these men, who are doing a first-class job, are rogue elephants and should be treated in the way that this Order proposes to treat them.
I am not joking about this. I am not making a stupid speech. I say in all sincerity that it is high time the Government stopped introducing these ridiculous Orders. We have an important job to do in this House, namely, to discuss ways and means of solving our economic problems. This is something in which I would like to participate. Somebody says, "This is it". If this is the way to solve our economic problems, all I have to say is, "God help us".

10.41 p.m.

Sir Douglas Glover: I think that the whole House has listened with great interest to the speech of the


hon. Member for Liverpool, Walton (Mr. Heller). The hon. Gentleman speaks as an expert. He has been on the Liverpool City Council for many years, and he has dealt with this problem from A to B, or perhaps I should say from A to Z. I accept what he said, that because of these Orders this House is becoming a little more expert on what goes on in these negotiations.
I agree with much of what the hon. Gentleman said. It is true that negotiations with a local authority inevitably take about four times as long as any similar negotiations with an industrial concern. The committee meets only once a month; the chairman is absent; a meeting is cancelled because it is the August bank holiday, and so on. All this causes delay, and therefore any decision by a local council is bound to be long delayed. The 60 people involved with this Order are so hostile to it because if they had been dealing with anyone other than a local authority they would have got this thing through long before the statutory freeze started on 20th July.
I understand why there is this great feeling of hostility. What I do not understand is why this union, from the Government's point of view, has the unfortunate title of A.S.S.E.T. Night after night the Parliamentary Secretary who, I understand, is a member of this union, comes here and tries to reply to these absurd Orders, and each one is worse than the one before. I suppose that the hon. Gentleman would like to alter the union's title by deed poll to "The Organisation for Embarrassing the Government." I would not he surprised if, at the next annual general meeting of the union, he was expelled for his activities on the Government Front Bench.

Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Member is getting a little way from the Order.

Sir D. Glover: I thought it was relevant to say that because the hon. Gentleman will soon address a number of members of this union and say a number of things with which they disagree.
I think that in this Order there is something more fundamental than there has been in a lot of the others. In this case, the wage increase was agreed to

and supported by a court of law. The county court said it was justified. I know that on other occasions this House has passed retrospective legislation, but never has either side accepted such legislation without a great deal of questioning in their own minds about the wisdom of doing so. What this boils down to is that the Government, because they have some temporary, I hope, financial difficulties, are carrying out a policy, exemplified by this Order, which is contrary to the ruling of the courts of law in this country.
I do not want to take this too far, but it is a very dangerous thought to get into the mind of a Government. Once they begin to say, "Because of difficulties with our policy we will override the rulings of the courts" the Government are adopting a very dangerous mental attitude. It was Benjamin Franklin who said that a nation that was prepared to give up freedom and justice to overcome a little temporary difficulty was worthy of neither freedom nor justice.
Here there is a real point of substance. The Government have some difficulties, and they are under some pressure and difficulties, but they are going as far as overruling a judgment of the county court to carry out their policy and when only 60 people are affected—and when every speech tonight has overwhelmingly shown the justice and fairness of this wage award.
I do not think that the Minister will try to justify the argument that these men are not entitled to the award. I agree with the hon. Member for Walton that once we have these differentials, and once the supervisors feel that they have no advantage in making a productivity agreement work, there is not much point in negotiating such an agreement. Somebody has to try to make it work.
The Minister will probably seek to justify the Government's action by saying that the Government have to adopt a line right across the board, with no exceptions, in order to make the prices and incomes policy work. But we are too old hands in the House; there are far too many Members with experience of industry and local government, on both sides, who know that this argument is as watertight as a colander. The hon. Member for Walton said that this was hitting at the trade


unions, and that if these men had had no trade union they could have got their increase.
Many of these cases are going on. The 60 members of A.S.S.E.T. have taken 18 months to negotiate this agreement, and have been supported in the courts, and if the Government are now to bring in the whole power of Parliament to say that this increase cannot be granted they will make a nonsense of the whole democratic process. The fact they are to overrule a judgment of the courts should fill the House with suspicion about the thinking that is going on within the Government as to the way in which to make their prices and incomes policy work, not only in respect of this Order but for all awards for the future. I view the prospect with great alarm.

10.50 p.m.

Mr. Alexander W. Lyon: Critics of the Order on both sides of the House have repeatedly said tonight that the Instrument applies only to 60 workers, that it is a fleabite and that we should not bother when so many other people have been getting increases to which the Government's attention has not, been drawn. But that was not the opinion of the General Secretary of A.S.S.E.T., who was present in the county court when the judge gave his judgment in this case. Clive Jenkins was reported in The Times of 28th February last as having said:
This is the first time that an employer's deduction of six months' pay increase has been challenged. It restores that six months and shows that thousands of employers who have withheld six months' increase are acting illegally and in defiance of the law. Those employers have been pocketing six months of their employees' increases in wages, and they ought to be made to pay up".
We are, therefore, discussing not 60 workers but thousands. We are, in other words, discussing a basic issue of principle; of whether the Government should apply the prices and incomes policy as fairly as possible or whether they should give up trying to apply it because of what has happened in one case involving 60 people.
I have been astonished at some of the remarks made tonight by hon. Members who have talked about the Order being unfair to 60 workers. Consider the un-

fairness of not applying it to those 60 workers, when other workers have had their increases deferred for six months or more. Although the prices and incomes policy cannot be so refined as to ensure perfect justice—there could not be absolute justice without there being an army of arbitrators to enforce it—the Government must act as fairly as possible, even when only 60 workers are involved in a case. That is particularly so when the union concerned, the most militant opponent of the prices and incomes policy, is treating this as a test case. The Government were bound to apply this Order if they were to demonstrate that they wished to be fair to all workers in the operation of the prices and incomes policy.
My hon. Friend the Member for Liverpool, Walton (Mr. Heffer), in an interesting speech, suggested that we should be more concerned with getting the country out of its present economic mess. I intervened to remind him that that was what the Government were doing by their prices and incomes policy. After all, the policy was successful during the period of freeze, so much so that wages increased by only ·65 per cent. during that period. This has meant that we have established a base from which we can move forward towards continued growth, provided we can keep that growth at a sustained rate. If we continue to increase growth and do not let rip by breaching the prices and incomes policy, we will have steadily increasing wages and all workers, not just 60, will benefit from the increased standard of living that will follow.
It has been suggested that these 60 workers are not being paid enough for the responsibility they shoulder. That may be so, but they are certainly being paid a great deal more than many other workers, many of whom have, either voluntarily or compulsorily, had their wage increases restrained. If large numbers of workers have voluntarily accepted the prices and incomes policy, including the period of freeze, why should 60 men be allowed to get away with it? That was the reason for the Order. It is ultimately a matter of social justice, and I believe that social justice would be best served by applying the Order.

11.0 p.m.

Mr. Ian Mikardo: I was delighted with the speech of my hon. Friend the Member for York (Mr. Alexander W. Lyon) for two reasons. The first is that while I am a supporter of the Government—although I disagree with them in this matter—I would not have been happy if there had not been one voice raised during this debate in favour of them. If my hon. Friend's speech did nothing else, it at least relieved the monotony and perhaps lessened the tension on that account. I am sure that the Parliamentary Secretary was as delighted with it as I am.
My hon. Friend's speech also pleased me because it let the cat out of the bag in a way that the Parliamentary Secretary will not do. The key phrase in which my hon. Friend said in justifying the application of the Order to this group of people was that it was a matter of principle about which action had to be taken, particularly because they are members of the most militant organisation opposed to the prices and incomes policy.
That is exactly what these chaps believe. They may be right or wrong—I would not know. I do not know what is in the mind of the Government. I can judge as well as the next man what people do, but I cannot judge their motives for doing it, because that is a matter between them and their consciences. So I do not know what has motivated the Government in picking on this particular group as the subject of this Order. I do not know whether these men are right in their belief that they are being picked on precisely because they were militant and because they initiated a court action. But believe it they certainly do, and their belief will be enormously reinforced by my hon. Friend's observations.
If I might suggest it to the Parliamentary Secretary with great respect, if that is not the reason for the Order being made, he should say so and do what he can to lessen the damage that might have been caused in the minds of this group of workers, and perhaps some other groups of workers, by those observations.
My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and one or two

hon. Gentlemen opposite have referred to the way in which this problem was accentuated because these chaps were employed not by a company—or even by a nationalised industry for that matter—but by a local authority which, because of the democratic processes, inevitably moves in these matters a good deal more slowly than anyone else.
If, Mr. Deputy Speaker, within this debate, which I know has very narrow terms of reference, I may be permitted one observation about the general problem of industrial relations, I would say that the one thing I have learned most in all the years I have been involved in these matters is that in industrial relations it is not the soft answer but the quick answer which turneth away wrath. The thing that causes the most trouble—I would say the great part of industrial trouble—is the slowness of the negotiating process. I say at once that I do not blame only the employers' side in the negotiating machinery for this, because sometimes trade unions are terribly slow as well.
In this case, because of the facts mentioned by my hon. Friend out of his experience with a great local authority, this wage increase was the result of negotiations spread over a period of no less than four years. Just think, Mr. Deputy Speaker, of the attitude of chaps who have had these negotiations going on, arising out of the very good productivity agreement for the men whom they supervised, in the firm belief that there was no division of view about the fact that in time there would be repercussive effects on their own earnings, and that these would be made retroactive.
That was their firm expectation, and they had every right and reason for that expectation. Suddenly, when the employers are agreed about it, the thing is chopped off. I do not believe that there is one hon. Member who if he were in that situation would not feel, as these chaps feel, that he was being picked on. These workers do feel that.
My hon. Friend the Member for York said that one has to operate an incomes policy which is as nearly as possible just and is seen to be just. I agree that one could not possibly have an incomes policy which was 100 per cent. just without an administrative apparatus


which would be absolutely impossible. Therefore, because there must be marginal departures from theoretical justice, becomes terribly important that each of these departures should look and smell clean.
It becomes terribly important that there should not be in any of these inevitable departures from a strict level of justice, any case in which one might think that the wrong motives were activating action against particular groups. I say to my hon. Friend the Parliamentary Secretary and to the Government that nobody could say of this Order that it is and appears to be absolutely clean in its motivation. That is why it is so bad that we should have this Order, and I agree with those who have said that it is possibly the worst of all these Orders which have come before the House.
I do not suppose that the Parliamentary Secretary is authorised to say this evening that he will take back the Order and ask his right hon. Friend to have a look at it. I have half a feeling that if he were authorised he would be highly tempted to do that. But I am afraid that we are going to have to go through the agonies of decision on that account. When those agonies transpire, I for one shall contract out of them.

11.3 p.m.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): I begin by confirming the facts of the case as outlined by the hon. Member for Finchley (Mrs. Thatcher). As we have been led to expect by the last eight debates, the Opposition deploy their factual case with great clarity and accuracy. On this occasion, however, the hon. Lady did two things which have not been done on a previous occasion. She produced two rabbits from the hat which at least astounded her hon. Friend the Member for Birmingham, Selly Oak (Mr. Gurden) and the hon. Member for Orpington (Mr. Lubbock).
These were the revelations, as they were taken by the hon. Members to be, of the issue of consent letters by my right hon. Friend the Minister of Labour agreeing to the proposed 7 per cent. increase and the question of the dates of back dated increases in dispute between the union and the Government.
I will deal, first, with the fact quoted often by the hon. Lady, and still more

often by following speakers. The six months in dispute, for which the Government originally asked for postponement, were before the incomes policy was announced and long before 20th July, 1966; 18 months before the Government's first White Paper and eighteen months before the Bill, as amended, was passed by the House.
The hon. Lady will understand that policy towards existing commitments formed a very substantial part of Government incomes policy. By definition existing commitments must involve steps taken and decisions made, considered and approved by the parties before the policy was put into operation. I refer hon. Members to the White Paper on the Standstill (Cmnd. 3073) which talks, in paragraphs 19 to 23 about the Government's attitude to existing commitments, and to Cmnd. 3150, paragraphs 32 to 36 which is also about the Government's attitude to existing commitments. To have any attitude to existing commitments means that the Government must have an attitude towards decisions already taken, to obligations already accepted and to arrangements already approved beween the parties to the agreement.
Therefore, I do not think that the hon. Lady should deal with these matters as if they were a great surprise to her. The Government's incomes policy requires an attitude about commitments entered into before 20th July. I must say to her that, in principle, I can see no difference between the Government having an attitude and taking action upon a commitment entered into six days or six weeks, or six months or 18 months, before the policy was put into operation. The Government required that existing commitments entered into before 20th July and confirmed in terms of the times, date of operation and amount should be deferred by six months and that no payment even for the period after the six months deferment should be made before 1st January, 1967.
There are substantial numbers of employees in the country who voluntarily, if not willingly, accepted that deferment, who voluntarily, if not willingly, agreed that the operative date should be postponed by six months and that no payment should be received by them until after 1st January, 1967. By the nature of retrospective claims and by the nature


of long postponements, these are, by and large, in the public service, because retrospection is largely unknown in private industry. As an example, I take the 40,200 civil servants in certain professional grades who had an operative date of 1st January, 1965, six months before the A.S.S.E.T. operative date. They agreed voluntarily to the deferment of that date for six months. They agreed voluntarily to receive no payment till 1st January, 1967. They voluntarily conformed to all the Government's policy on existing commitments—entirely, completely and on a voluntary basis.
I am sure that, in economic if not in legal terms, the hon. Lady would have no objection to the action of those unions—there are many of them, but I will not read out the list now—which, with dates and periods similar to the A.S.S.E.T. agreement, nevertheless agreed to a six months postponement and agreed to payment being made only on 1st January, 1967. What the hon. Lady should try to do, if she catches your eye again, Mr. Deputy Speaker—as I believe she is entitled to do under the rules governing a debate on a Prayer—is to tell the House what she would have had my right hon. Friend say to those 40,200 civil servants who agreed voluntarily to the six months postponement, who agreed voluntarily to the payment being deferred till 1st January, 1967, and the many other categories whom I could quote, if they had said "Why should 80 members of A.S.S.E.T. and N.A.L.G.O. be allowed to press their claims forward whilst we have made a voluntary deferment in what we believe to be the national interest?"

Sir D. Glover: Will the hon. Gentleman say how long these 40,000 civil servants had been negotiating, and how long is it since they had their previous increase?

Sir Harmar Nicholls: rose—

Mr. Deputy Speaker: Order. We cannot have an intervention in an intervention.

Mr. Lubbock: On a point of order, Mr. Deputy Speaker. While Mr. Speaker was in the Chair he stopped the hon. Member for Birmingham, Aston (Mr. Julius Silverman) from discussing Orders

other than the Order which is before the House. Is there to be a special exemption to this ruling for the Parliamentary Secretary?

Mr. Deputy Speaker: I have been listening carefully to the debate, and I assumed that the hon. Gentleman was coming to this Order and was laying the foundation for his argument.

Sir Harmar Nicholls: rose—

Hon. Members: Order.

Mr. Hattersley: Let me explain what I believe to be the relevance of that point to the Order which we are discussing. The Government's policy about the few Orders that we have debated—nine in all—and certainly about this specific Order tonight, is that in a sense it is necessary to demonstrate the fairness of the Government policy. If Orders like this were not made, people who adopted and accepted the Government's policy on a voluntary basis would feel themselves misused.

Sir Harmar Nicholls: rose—

Hon. Members: Order.

Mr. Hattersley: The examples that I have given are to demonstrate that there are substantial numbers of people who would be entitled to think themselves misused had they not seen a comparable group—A.S.S.E.T. foremen in Birmingham—required to operate the same deferments as they voluntarily operated themselves.
The second revelation, to which I will now move on because of the rules of order, is the suggestion that there is certainly something surprising and possibly something sinister about the—

Sir Harmar Nicholls: On a point of order, Mr. Deputy Speaker. It is all very well for hon. Members opposite to call "Order", but they were not in the House when hon. Members on this side were deploying the case and were not allowed to make some points. Now the Joint Parliamentary Secretary, in defiance of the rulings given against my hon. Friends and others, has brought out examples on which he should be cross-examined if he is basing his answer on them.

Mr. Deputy Speaker: The hon. Member, of course, must keep within the rules of order. The question of interventions in the Minister's speech is not a matter for the Chair if he is not disposed to give way.

Mr. Hattersley: I propose to move to the second revelation of the hon. Lady. It the hon. Member for Peterborough (Sir Harmar Nicholls) has something cogent to say, I will answer it.
My right hon. Friend sent letters to Birmingham Corporation giving consent to certain arrangements. The hon. Lady said that this was surprising, if not sinister, and the hon. Member for Orpington echoed that. If the hon. Member would do me the courtesy of looking at the Prices and Incomes Act, he will see that under Section 28(2) my right hon. Friend or any Minister designated is entitled to write to any party who is subject to an Order under the Act and give his consent to additional payments being made. This should not come as a surprise. Three weeks ago, when we debated the Press Association Order, I said that my right hon. Friend was in the process of writing letters to some of the parties in that dispute allowing them to make payments even though Section 29 of the Act was in operation.
The Order in relation to Birmingham is very simple and precise. Hon. Members who have said that the 7 per cent. increase is acceptable under the Act are certainly right. A 7 per cent. increase was deferred for six months in conformity with our policy. For reasons best known to them, although they were not revealed this evening, A.S.S.E.T. did not dispute that deferment. That 7 per cent. was deferred for six months and, therefore, can legitimately go on in terms of prices and incomes policy, but Section 29 requires remuneration of all sorts to be limited to the level before July 1966. Because it is an all-embracing and omnibus provision, my right hon. Friend has the power and responsibility to make exceptions to it.
The hon. Member for Selly Oak asked why it was my misfortune—his description, not mine—despite my association with the union and the city, to speak against the Prayer on behalf of the Government. The reason is very simple. My right hon. Friend is the appropriate

Minister designated in the Order to give his consent to additional payments above the level of 20th July, 1966. That is exactly what he has done in this case. There is no doubt about it. He wrote to Birmingham Corporation giving that permission on 3rd April and the Corporation replied on 5th April.

Mr. Lubbock: If the hon. Gentleman had listened to my speech he would have known that I did not in the least complain about his laying the letter, but I drew attention to the powers he had to give remuneration higher than the levels of 20th July, under Section 29, not Section 28(2). If he had laid that before the House at the same time, we could have had greater opportunity to discuss the Order.

Mr. Hattersley: The hon. Member will understand that when there is an Order to which a Prayer has been put down and my right hon. Friend has written to the parties saying that some payments can be made, it is unlikely—

Mr. Eyre: In connection with the word "parties", will the hon. Gentleman confirm that when the Minister wrote to the Town Clerk he also wrote to the parties—that is to say, N.A.L.G.O. and the other people involved? According to my information, he did not.

Mr. Hattersley: I cannot confirm that my right hon. Friend did it on the same day, but I can confirm that N.A.L.G.O. at least knows the position.

Mrs. Thatcher: Will the hon. Gentleman tell us exactly when the Minister wrote to Birmingham Corporation and when N.A.L.G.O. and A.S.S.E.T. were informed?

Mr. Hattersley: I am afraid that I cannot give the hon. Lady that information, but I can certainly say that parties have been informed.
I turn now to the point I was making in reply to the hon. Member for Orpington. I say again—and I am sure he understands—that any Government spokesman replying to a Prayer against an Order of this sort is unlikely to keep from the House the fact that the Minister of Labour has written letters agreeing that some payments shall be made. It is inconceivable that in the circumstances he would want to hide the fact that some


payments were going forward. If a Government spokesman on any future occasion reflects and enjoys the same feelings I do, he will be only too happy to remind the House that payments legitimate under the prices and incomes policy can and do go ahead.

Sir Harmar Nicholls: On a point of order. Is it not an accepted rule of the House that if a document is referred to from the Treasury Bench it should be laid on the Table? In this instance, since so many people want the actual letter in order to get the date, should not the Joint Parliamentary Secretary arrange for it to be laid on the Table? Is that not a rule of the House?

Mr. Deputy Speaker: That is only appropriate if it is a State paper. I do not think this letter comes into that category.

Sir Gerald Nabarro: Further to that point of order. Mr. Deputy Speaker. Is it not a fact that protracted deliberations took place in Standing Committee D on this very point in proceedings on the Iron and Steel Act and that, after full consultation, the Chairman of that Committee, my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke), caused the letter to be laid on the Table? The hon. Member for Poplar (Mr. Mikardo) knows this to be true. It was the famous Winterbottom letter. Cannot we have this letter laid on the Table on the same Parliamentary principle?

Mr. Deputy Speaker: The matter only arises, of course, when a Minister refers to the paper. In this case, it was the hon. Lady the Member for Finchley (Mrs. Thatcher) who introduced the matter.

Sir Harmar Nicholls: Further to that point of order. It is within the recollection of the House that the Joint Parliamentary Secretary, speaking from the Treasury Bench, has referred to the letter. I submit that this case clearly comes within the rule of the House.

Mr. Deputy Speaker: May I ask the Joint Parliamentary Secretary to give us some guidance? Was he referring to this paper and is it a State paper?

Mr. Hattersley: It is a letter and clearly I referred to it. I did so in

response to its introduction by hon. Members opposite. If I can help the House to make progress by doing so, irrespective of what is required in terms of Order, I shall be happy to make arrangements through the usual channels to enable the hon. Member for Finchley to see it.

Sir G. Nabarro: Further to that point of order. We now have a Ministerial admission that this missive is in existence. The hon. Gentleman has now referred to the missive three times. This is exactly equivalent to the missive I alluded to, the famous Winterbottom letter, and in these circumstances cannot we have the missive laid on the Table tonight before we vote in order that the merits of the case may be fully considered by us?

Mr. James Griffiths: Further to that point of order. Is it not the rule, laid down by successive Speakers many times, that if a document is quoted from the Treasury Bench it must be laid upon the Table, but that a document can be referred to without that rule applying?

Mr. Deputy Speaker: This is not easy and I would be grateful for the patience of the House. I will quote Erskine May at page 458, where it says:
A Minister who summarises a correspondence, but does not actually quote from it, is not bound to lay it upon the table.
The Parliamentary Secretary has not quoted from it; he has summarised it.

Sir John Hobson: I would not desire to contest your Ruling at all, Mr. Deputy Speaker, but there is another rule that if a Minister refers to a State paper he is bound to lay it, and this is a statutory document which is purported by the Minister as having been sent under this Statute. I respectfully submit that as such it should be laid.

Mr. Deputy Speaker: The right hon. and learned Gentleman is quoting the same rule and, with the greatest respect, he is misquoting it. I must rely on the statement I have made that it is not required to be laid. In the circumstances, I must rule on that and we must make progress.

Sir Harmar Nicholls: rose—

Mr. Deputy Speaker: I hope that the hon. Gentleman will not repeat the same point of order.

Sir Harmar Nicholls: I want to ask if there is a distinction between a State paper and a document. If this is a document, then the Ruling given by the Chair is quite acceptable. If it is a State paper, it comes into a different category. I claim that it is a State paper and should be laid.

Mr. Deputy Speaker: I understand that the document referred to must be a State paper. I must, therefore, insist on the Ruling I have given. It does not preclude the debate from going on. I call the Parliamentary Secretary.

Mr. Hattersley: I feared that the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) would be denied an answer to the question which he so courteously puts to me each fortnight. I turn to that now in the hope that I can satisfy him.
He asked what would happen on the expiry of Part IV of the Prices and Incomes Act on 11th August, 1967. He has asked two questions. The first is whether the Corporation on whom the Order is binding is required to pay arrears for the period under review. I can only repeat what I said on 22nd March, namely that on the best legal advice open to us there is no requirement on the Corporation to make a back payment. I subscribe to the view of the hon. Member for Poplar (Mr. Mikardo) that the only way one can be sure is by testing it in the courts. The Government's legal advice is that when tested it is unlikely that firms will be obliged to pay money for periods during which Orders have been in force.
The second point the hon. and learned Gentleman made was that, irrespective of legal entitlement to back pay, would the payment—in this case the disputed 15 per cent.—be able to go forward on or after 11th August? To that there are two answers. The first is the legal answer. On the advice available to the Government, the legal contract which required employers to pay 15 per cent. before the Order came into operation will automatically be reimposed and reactivated when Part IV of the Prices and Incomes Act lapses. The second point is whether the payment would be allowed

under the Government's criteria or is postponement possible? That is a matter which could only be decided by the Government at the time. The hon. and learned Gentleman knows well—and I am sorry that I have caused him so much despair—the criteria that the Government have laid down to operate from mid-summer 1967. The Government will have to examine these cases one by one and decide whether they need referring to the Prices and Incomes Board or whether the payment can be made automatically when Part IV lapses.
The hon. Member for Ormskirk (Sir D. Glover) raised again tonight the question of the number of people covered by the Order, as he has raised it week after week, despite the implied rebukes he receives from his own Front Bench, from the hon. Member for Worthing (Mr. Higgins) a fortnight ago, and from the right hon. Member for Enfield, West (Mr. Iain Macleod) six months ago. The hon. Gentleman draws attention to the fact that only 70 people are covered by the Order and says that there is no point in the Government imposing Orders an such a small number.
The success of the Government's incomes policy is demonstrable by the fact that Orders have been necessary in only nine cases, and necessary against only a small number of employees. There is no doubt that, in economic terms, the Government's incomes policy has been a success. If hon. Members opposite will look at wage movements during the period since 20th July, they will see that they have been uniquely small, and they have been uniquely small because of the prices and incomes policy.
The prices and incomes policy has, in general, been voluntarily accepted and voluntarily implemented. The small number of Orders is a measure of our success. The fact that we are making Orders against such numbers as 70 men is not cause for criticism of the Government but for congratulation, in that over the wide field of general industrial policy the Government's principles and proposals have been accepted willingly, if not gladly.
My hon. Friend the Member for Poplar asked, as he has on previous Orders, why these men and this union have been singled out for treatment in this way. I can only give him the answer


that I gave when we debated an Order affecting this union five weeks ago.

Mr. Mikardo: I never asked the question.

Mr. Hattersley: My hon. Friend did not ask the question, but he implied an answer, and I was doing him the credit of expecting that he really wanted me to give the Government's view on the subject which he so contentiously raised. The answer to the question which he might have asked but did not is this.
There is no question of discrimination by the Government against this union. What is happening is no more than a statistical inevitability. If the Government are holding the line of their incomes policy and are prepared to make an Order against unions which break it, it is statistically inevitable that those unions which break the line most often are the ones against which Orders are made most frequently. It is as simple as that. It is as straightforward as that. It is no more sinister than that.

Mr. J. J. Mendelson: A moment ago, my hon. Friend made an important point. He said that this Order will apply until Part IV of the present legislation lapses. Am I right in understanding him to say that, under the new Part II—if the House were to pass the Bill which the First Secretary of State announced today—this same increase could again be held up for a fresh period? Is that what he is saying?

Mr. Hattersley: There is no question but that it could be. I am not prepared to hypothesise on whether it will be, but

there is no question as to whether it could be.

I return to the point I was making. The Government have made most Orders against those parties who have sought to break the line of incomes policy. We have made them irrespective of the parties, irrespective of the unions, irrespective of their militancy. The fact that A.S.S.E.T. has had two Orders made against it is in no way remarkable. A.S.S.E.T. has twice chosen to try to defeat the aims of the incomes policy.

I conclude in this way. Three of my hon. Friends suggested that there was no social justice in this sort of Order and implied—I think that I may say this within the rules governing the debate—that because there was an absence of social justice in the Order, there was an absence of social justice throughout the Government's incomes policy. They have said this today, a day when the Government have authorised payments to lowest-paid workers, in accordance with the criteria, for over 1 million people in British industry. This is a justification of the Government's contention that, where payments should and must in social justice go forward, the Government will approve them, but that where payments would flout the incomes policy, break the line and destroy the economic policy which the Government are building, we have every right to expect our hon. Friends to support us in the Lobby on such occasions as this.

Question put: —

The House divided: Ayes 148, Noes 217.

Division No. 306.]
AYES
[11.30 p.m.


Alison, Michael (Barkston Ash)
Carr, Bt. Hn. Robert
Fletcher-Cooke, Charles


Atkins, Humphrey (M't'n &amp; M'd'n)
Chichester-Clark, R.
Forrest, George


Awdry, Daniel
Clegg, Walter
Fortescue, Tim


Baker, W. H. K.
Cooke, Robert
Foster, Sir John


Balniel, Lord
Cooper-Key, Sir Neill
Galbraith, Hn. T. G.


Batsford, Brian
Corfield, F. V.
Gibson-Watt, David


Bennett, Sir Frederic (Torquay)
Costain, A. P.
Gilmour, Ian (Norfolk, C.)


Berry, Hn. Anthony
Crawley, Aidan
Glover, Sir Douglas


Bessell, Peter
Crouch, David
Goodhart, Philip


Biffen, John
Crowder, F. P.
Grant, Anthony


Birch, Rt. Hn. Nigel
Currle, G. B. H.
Grieve, Percy


Black, Sir Cyril
Davidson, James (Aberdeenshire, W.)
Griffiths, Eldon (Bury St. Edmunds)


Blaker, Peter
d'Avigdor-Goldsmid, Sir Henry
Gurden, Harold


Bossom, Sir Clive
Deedes, Rt. Hn. W. F. (Ashford)
Hall-Davis, A. G. F.


Braine, Bernard
Dodds-Parker, Douglas
Hamilton, Marquess of (Fermanagh)


Brewis, John
Eden, Sir John
Hamilton, Michael (Salisbury)


Bromley-Davenport, Lt. Col. Sir Walter
Elliot, Capt. Walter (Carshalton)
Harris, Reader (Heston)


Bryan, Paul
Emery, Peter
Harrison, Col. Sir Harwood (Eye)


Buck, Antony (Colchester)
Errington, Sir Eric
Hawkins, Paul


Campbell, Gordon
Eyre, Reginald
Heald, Rt. Hn. Sir Lionel


Carlisle, Mark
Fisher, Nigel
Heseltine, Michael




Higgins, Terence L.
Maude, Angus
Russell, Sir Ronald


Hiley, Joseph
Maxwell-Hyslop, R. J,
Sharples, Richard


Hill, J. E. B.
Maydon, Lt.-Cmdr. S. L, C.
Shaw, Michael (Sc'b'gh &amp; Whitby)


Hirst, Geoffrey
Mills, Stratton (Belfast, N.)
Smith, John


Hobson, Rt Hn. Sir John
Miscampbell, Norman
Steel, David (Roxburgh)


Hogg, Rt. Hn. Quintin
Monro, Hector
Stodart, Anthony


Holland, Philip
More, Jasper
Summers, Sir Spencer


Hooson, Emlyn
Morrison, Charles (Devizes)
Taylor, Edward M.(G'gow, Cathcart)


Hornby, Richard
Munro-Lucas-Tooth, Sir Hugh
Taylor, Frank (Moss Side)


Howell, David (Guildford)
Murton, Oscar
Teeling, Sir William


Hunt, John
Nabarro, Sir Gerald
Temple, John M.


Iremonger, T. L.
Neave, Airey
Thatcher, Mrs. Margaret


Jenkin, Patrick (Woodford)
Nicholls, Sir Harmar
Turton, Rt. Hn. R. H.


Jopling, Michael
Noble, Rt. Hn. Michael
van Straubenzee, W. R.


Joseph, Rt. Hn. Sir Keith
Nott, John
Vaughan-Morgan, Rt. Hn. Sir John


Kaberry, Sir Donald
Onslow, Cranley
Walker, Peter (Worcester)


Kershaw, Anthony
Page, Graham (Crosby)
Wall, Patrick


King, Evelyn (Dorset, S.)
Pearson, Sir Frank (Clitheroe)
Ward, Dame Irene


Kitson, Timothy
Peel, John
Weatherill, Bernard


Knight, Mrs. Jill
Percival, Ian
Webster, David


Legge-Bourke, Sir Harry
Pike, Miss Mervyn
Whitelaw, Rt. Hn. William


Loveys, W. H.
Pink, R. Bonner
Wills, Sir Gerald (Bridgwater)


Lubbock, Eric
Pounder, Rafton
Wilson, Geoffrey (Truro)


MacArthur, Ian
Price, David (Eastleigh)
Wolrige-Gordon, Patrick


Maclean, Sir Fitzroy
Prior, J. M. L.
Wright, Esmond


Macleod, Rt. Hn. Iain
Pym, Francis



Macmillan, Maurice (Farnham)
Rawlinson, Rt. Hn. Sir Peter
TELLERS FOR THE AYES:


Maddan, Martin
Renton, Rt. Hn. Sir David
Mr. R. W. Elliott and


Maginnis, John E.
Ridley, Hn. Nicholas
Mr. David Mitchell.


Marten, Neil
Rossi, Hugh (Hornsey)





NOES


Abse, Leo
Evans, Albert (Islington, S.W.)
Ledger, Ron


Albu, Austen
Evans, Ioan L. (Birm'h'm, Yardley)
Lee, Rt. Hn. Frederick (Newton)


Alldritt, Walter
Fernyhough, E.
Lestor, Miss Joan


Allen, Scholefield
Finch, Harold
Lewis, Ron (Carlisle)


Armstrong, Ernest
Fitch, Alan (Wigan)
Lomas, Kenneth


Atkins, Ronald (Preston, N.)
Fletcher, Raymond (Ilkeston)
Loughlin, Charles


Barnett, Joel
Foot, Sir Dingle (Ipswich)
Lyon, Alexander W. (York)


Baxter, William
Ford, Ben
Lyons, Edward (Bradford, E.)


Bence, Cyril
Forrester, John
Mabon, Dr. J. Dickson


Binns, John
Freeson, Reginald
McBride, Neil


Bishop, E. S.
Galpern, Sir Myer
MacColl, James


Blackburn, F.
Gardner, Tony
MacDermot, Niall


Blenkinsop, Arthur
Garrett, W. E.
Macdonald, A. H.


Boardman, H.
Ginsburg, David
McGuire, Michael


Bottomley, Rt. Hn. Arthur
Gordon Walker, Rt. Hn. P. C.
Mackenzie, Gregor (Rutherglen)


Braddock, Mrs. E. M,
Gourlay, Harry
Mackie, John


Bradley, Tom
Gray, Dr. Hugh (Yarmouth)
Mackintosh, John P.


Bray, Dr. Jeremy
Grey, Charles (Durham)
Maclemtan, Robert


Brooks, Edwin
Griffiths, Rt. Hn. James (Llanelly)
McMillan, Tom (Glasgow, C.)


Broughton, Dr. A. D. D.
Hamilton, James (Bothwell)
MacPherson, Malcolm


Brown, Hugh D. (G'gow, Provan)
Hamling, William
Mahon, Peter (Preston, S.)


Brown, R. W. (Shoreditch &amp; F'bury)
Hannan, William
Mallalieu, J.P.W. (Huddersfield, E.)


Buchan, Norman
Hart, Mrs. Judith
Manuel, Archie


Buchanan, Richard (G'gow, Sp'burn)
Haseldine, Norman
Mapp, Charles


Cant, R. B.
Hattersley, Roy
Marquand, David


Carmichael, Neil
Hazell, Bert
Marsh, Rt. Hn. Richard


Coe, Denie
Healey, Rt. Hn. Denis
Mason, Roy


Coleman, Donald
Henig, Stanley
Mayhew, Christopher


Concannon, J. D.
Hooley, Frank
Mellish, Robert


Conlan, Bernard
Houghton, Rt. Hn. Douglas
Millan, Bruce


Crawshaw, Richard
Howarth, Robert (Bolton, E.)
Miller, Dr. M. S.


Cronin, John
Howell, Denis (Small Heath)
Milne, Edward (Blyth)


Crossman, Rt. Hn. Richard
Howie, W.
Mitchell, R. C. (S'th'pton, Test)


Dalyell, Tam
Hoy, James
Moonman, Eric


Davidson, Arthur (Accrington)
Huckfield, L.
Morgan, Elystan (Cardiganshire)


Davies, Dr. Ernest (Stretford)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Morris, Charles R. (Openshaw)


Davies, G. Elfed (Rhondda, E.)
Hughes, Roy (Newport)
Morris, John (Aberavon)


Davies, Ifor (Gower)
Hunter, Adam
Moyle, Roland


Davies, Robert (Cambridge)
Hynd, John
Mulley, Rt. Hn. Frederick


de Freitas, Rt. Hn. Sir Geoffrey
Irvine, A. J. (Edge Hill)
Neal, Harold


Delargy, Hugh
Janner, Sir Barnett
Noel-Baker, Francis (Swindon)


Dell, Edmund
Jay, Rt. Hn. Douglas
Oakes, Gordon


Dempsey, James
Johnson, James (K'ston-on-Hull, W.)
Ogden, Eric


Dewar, Donald
Jones, Dan (Burnley)
O'Malley, Brian


Dobson, Ray
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Oram, Albert E.


Doig, Peter
Jones, J. Idwal (Wrexham)
Oswald, Thomas


Dunwoody, Mrs. Gwyneth (Exeter)
Jones, T. A. (Rhondda, W.)
Owen, Dr. David (Plymouth, S'tn)


Eadie, Alex
Judd, Frank
Owen, Will (Morpeth)


Edelman, Maurice
Kelley, Richard
Page, Derek (King's Lynn)


Edwards, Rt. Hn. Ness (Caerphilly)
Kenyon, Clifford
Palmer, Arthur


Edwards, William (Merioneth)
Kerr, Dr. David (W'worth, Central)
Parker, John (Dagenham)


English, Michael
Lawson, George
Pavitt, Laurence







Pearson, Arthur (Pontypridd)
Sheldon, Robert
Wells, William (Walsall, N.)


Pentland, Norman
Shore, Peter (Stepney)
Whitaker, Ben


Perry, Ernest G. (Battersea, S.)
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
White, Mrs. Eirene


Prentice, Rt. Hn. R. E.
Silkin, Rt. Hn. John (Deptford)
Whitlock, William


Price, Christopher (Perry Barr)
Silkin, Hn. S. C. (Dulwich)
Williams, Alan (Swansea, W.)


Price, Thomas (Westhoughton)
Skeffington, Arthur
Williams, Alan Lee (Hornchurch)


Price, William (Rugby)
Slater, Joseph
Williams, Clifford (Abertillery)


Probert, Arthur
Snow, Julian
Williams, Mrs. Shirley (Hitchin)


Rees, Merlyn
Spriggs, Leslie
Williams, W. T. (Warrington)


Reynolds, G, W.
Steele, Thomas (Dunbartonshire, W.)
Willis, George (Edinburgh, E.)


Rhodes, Geoffrey
Stonehouse, John
Wilson, William (Coventry, S.)


Richard, Ivor
Swingler, Stephen
Winnick, David


Roberts, Goronwy (Caernarvon)
Taverne, Dick
Winterbottom, R. E.


Roberts, Gwilym (Bedfordshire, S.)
Thomas, George (Cardiff, W.)
Woodburn, Rt. Hn. A.


Robertson, John (Paisley)
Thornton, Ernest
Woof, Robert


Robinson, Rt. Hn. Kenneth (St. P'c'as)
Tinn, James
Wyatt, Woodrow


Robinson, w. O. J. (Walth'stow, E.)
Urwin, T. W.
Yates, Victor


Rodgers, William (Stockton)
Walker, Harold (Doncaster)



Rose, Paul
Wallace, George
TELLERS FOR THE NOES:


Ross, Rt. Hn. William
Watkins, David (Consett)
Mr. Joseph Harper and


Rowland, Christopher (Meriden)
Watkins, Tudor (Brecon &amp; Radnor)
Mr. Walter Harrison.


Shaw, Arnold (Ilford, S.)
Wellbeloved, James

PLANNING PERMISSION, NORTHWICK

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]

11.40 p.m.

Mr. F. V. Corfield: I am grateful for the opportunity to raise a question relating to a planning decision which has caused great concern to my constituent, Mr. Pople, and it is one which seems to me to be so wholly nonsensical that I have found it quite impossible to offer any words of comfort by way of explanation. Indeed, I have been deeply concerned lest Mr. Pople should allow his sense of injustice to damage his health, or even lead him to inflicting on himself a personal injury by way of protest.
Although my experience of the hon. Gentleman's Ministry is such that I would not suggest unfairness in the sense of bias or failure to try to judge these matters on their merits, all I can say is that, having visited the site, the decision makes so little sense that it is inevitable that the applicant feels aggrieved, and it is quite impossible for me sincerely to try to put any other view, and even if I tried, because I could not be sincere, quite impossible for me to be convincing.
I think that I can claim some expertise in these matters. Apart from my period in the hon. Gentleman's office in which I was responsible for planning matters, I have a professional practice which has enabled me to hear countless so-called planning experts, and certainly I have heard perhaps all, or at any rate most, of those most eminent in this field in the country.
But when to my inability to see the sense of this decision is added the fact that Mr. Pople is wholly unfamiliar with the niceties either of planning or of planning procedure, it is inevitable that he should feel a sense of grave injustice for which, in the circumstances, no one can blame him, least of all the local planning authority, who in my opinion has acted in a ham-fisted manner in the extreme.
I have corresponded with officials only, and I understand that the Gloucestershire County Council is reluctant to make known the membership of its committees for fear that they should be lobbied. This is a curious concept, both of public service and local democracy, and one of which I profoundly disapprove. They are responsible, and they should be seen to be responsible for decisions of this nature.
Very briefly, the history of this case is that Mr. Pople purchased two adjoining cottages known as Rose Cottage and Ivy Cottage near the village of Northwick in my constituency. His intention was to renovate Rose Cottage and modernise it and demolish Ivy Cottage to provide space, among other things, for a garage. He sought and obtained byelaw approval from the local authority and went ahead because at that time he had no intention of altering the external appearance of the building, so no planning permission was required.
However, in the course of carrying out repairs to the roof he found that the timbers were rotten. He decided to strip it, and on further investigation he thought that while he was about it he would make a first-class job by demolishing and inserting a damp proof course. I should add that although Mr. Pople is a builder,


and had intended to do this work himself, he is a builder in a very small way, mainly concerned with maintenance, with no experience of building from scratch, hence his ignorance of planning procedures. I have already indicated that I doubt whether, even if he had that experience, he would have been much the wiser in understanding this decision.
At the same time as he discovered the condition of the roof timbers, the question arose of seeking planning permission for access to the site of Ivy Cottage to form a garage. It was here that the local planning authority came in. By the time its representative had visited the site demolition had proceeded to an extent that the view was taken that it was no longer a question of restoration or renovation but one of rebuilding upon the same site, and technically speaking I dare say that that was a quite correct decision. Mr. Pople was told to apply for permission to rebuild, and this permission was refused on the grounds that the site
was on a proposed development line in the green belt and the development did not fall within the limited area of development which it was the policy of the local planning authority to permit.
Mr. Pople accordingly appealed, by way of written representations, first, because he did not feel competent to present the case himself and, secondly, because he could not afford to instruct someone to do so on his behalf. I cannot therefore refer to the inspector's report, because there was none. I have had to rely upon the representations put forward by the county council. Reading under the heading "The Site and Surroundings", I note that it is said:
The two cottages are at the present time virtually demolished.
I cannot contest that. Certainly when I visited the site they were in a state that could be described as virtually demolished, but we all know that deterioration rapidly sets in in these circumstances, and when I visited the site it was some months after the event.
The representations continue:
The site is outside the limits of any established village and clearly standing in open country.
This is only partially true, although it depends on what one calls "open country". There are a number of houses and bungalows in the immediate vicinity,

and I very much doubt, from my admittedly somewhat cursory inspection, whether all are post-1947 Act.
An interesting point arises in that there is no mention in the representations by the county council of the nature of the countryside in this area, or of its merits from a scenic or any other point of view. It is therefore curious to find in the Minister's decision letter, dated 6th January, 1967, that:
The appeal site lies in attractive countryside.
I may be biased. I have the good fortune to live in the Cotswolds, and the even better fortune to have been born and bred in the Stretton Hills, in the most beautiful county of Shropshire.
Although I admit, as a countryman, that I find most countryside relatively attractive, particularly compared with the efforts of the planners as opposed to those of the laissez faire speculators who produced Bath and Cheltenham. Nevertheless, in the league of purely rural areas, this must come pretty low down the list. I wonder how that passage came to be in the Minister's letter. It is not in the evidence, and though my experience leads me to respect the Minister's inspectorate, if that arose from the comments of the Minister's inspector after visiting the site, I can only disagree and invite him to inspect the Cotswolds or Northumberland or even Clunton and Clunbury, Clungunford and Clun. It does not make it any easier to explain to Mr. Pople that he has been reasonably and sensibly treated.
Reading on in the Minister's letter, we find that the best the Minister can say is that
It is felt"—
that does not sound very convincing—
that the local planning authority are right to restrict further development …
By what conceivable stretch of the imagination or abuse of the English language replacing a building can be regarded as further development is wholly beyond me.
The letter goes on:
… to land within the confines of existing villages in order not to spoil the appearance and character of the countryside".
It is difficult to imagine how one spoils the appearance and character of the countryside by replacing something that


is there with something better, rather than by leaving a derelict pile of stones.
In the representations of the county council there is, first, the stated policy of the local planning authority which is said to be in accordance with "the circular", but that depends on the way in which the circular is interpreted. The county council's letter states:
Inside a Green Belt, approval should not be given, except in very special circumstances, for the construction of new buildings or for the change of use of existing buildings for purposes other than agriculture, sport, cemeteries, institutions standing in extensive grounds, or other uses appropriate to a rural area".
There is no question in this case of a changed use or the construction of a new building; and how one applies that paragraph in these circumstances is not immediately clear. The letter goes on:
It is clear from the fact that demolition was necessary that the existing cottages had reached the end of their useful life and therefore the work proposed constituted the erection of a new dwelling".
If ever there was a non sequitur it is that, because very few houses over 100 years old have damp courses in this country. Certainly they do not in the Cotswolds, where the charm of the ancient villages adds to the beauty of the countryside rather than detracts from it. I do not believe that the inhabitants of those villages feel under-privileged or that they are suffering hardship because of the absence of a miserable damp course. The letter continues:
The previous existence of a dwelling on the site is not in the view of the Local Planning Authority sufficient reason to warrant the granting of consent contrary to their Green Belt policy, and it is considered that where such circumstances exist the cost must be considered as if it were for the erection of a dwelling on a virgin site".
Even if that is so, what harm would be done to replace the building? Anybody who looks at the site cannot but agree that no conceivable harm would be done. The letter goes on:
The site is well outside the limits of any village and within the open countryside forming part of the Bristol Green Belt. Further development"—
note the word "further"
whether additional houses or replacement of dwellings which have outlived their usefulness and unrelated to the agricultural needs of the area must be contrary to the aims and intentions of the Green Belt".

Is this really so? Does this really make sense? There are, after all, a large number of people who want to live in genuine countryside; and that, by definition, means living outside the confines of any towns or villages. Why should they be prevented from doing so? Naturally if one gives free rein to development in the green belt or on white land one will destroy the open countryside. But in this case it is not being suggested that that should be done, because there is no question of new dwellings being erected. It is merely the replacement of a former or existing dwelling.
It follows that if we are to prohibit the replacement of these old houses as they end their useful lives—they are bound to reach that point eventually, but most of them will outlive the buildings being erected today—there will be a smaller and smaller number of places in which people can live away from either village or town. There is no evidence that the proportion of the population which wishes to live like that is decreasing. Even if that were the case, the mere fact that the population is growing means that the number of people demanding that sort of life is increasing. In any case, my impression is that the proportion of such people is also increasing. Yet it is the policy of the local planning authority—apparently supported by the Ministry—to decrease that demand wholly artificially by refusing permission to allow these buildings to be replaced. The authority's letter adds:
The adjoining cottage to the south, Diamont Cottage, and referred to in paragraph five of the appellant's statement, has been renovated in the past by minor works which were not sufficient to require planning consent.
One need only look at the adjoining house to see that it has the appearance of a modern building containing a few old materials.
This is one of those occasions when one regrets one's inability to act as advocate for one's constituent and to cross-examine the planning officers who write this sort of nonsense I have been quoting and put to them the question that ought to be put. I maintain that this sort of thing is an abuse of the written representation procedure, which is designed to save trouble and expense, not merely to the applicant, but to local planning authorities as well.
I have advised my constituent that he must put in a new application. As soon as he does so, I appreciate that the Parliamentary Secretary will be in some difficulty, because as soon as it is put in the application will be sub judice and the hon. Gentleman will be in the impossible position that he cannot judge its merits, which it is his duty to do, and at the same time prejudge the case by giving me a definite answer tonight. But I would ask him for the assurance, which I am sure he will give me, that if there is an appeal, the case will be looked at again, not merely completely afresh but with sympathy.
I hope that I can flatter myself to the extent of hoping that he will bear in mind that I have looked at the site and that I can assure him that by no conceivable stretch of the imagination could the rebuilding of that house do any harm. There is not in this case even the planning authority's perpetual hoary old bugbear of precedent—I suppose the most overworked argument in planning. The chances here of similar cases arising are remote, and the prospect of any number arising is non-existent.
I hope that in this case the Parliamentary Secretary will be prepared to make it clear to local planning authorities that this sort of rigid application of rules made for quite different purposes is wholly contrary to commonsense and the ordinary rights of the individual who is I submit, entitled to live where he wants to live, certainly within the sort of limits I have tried to outline.

11.58 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): The hon. Member for Gloucestershire, South (Mr. Corfield) has spoken with a knowledge and experience of both sides of the planning problem gained from holding my job before me and from being a very distinguished member of the planning Bar. I am sure that his constituent must feel that his case has been put forcibly and well, and with all the power and strength with which it could be put. I want now to put the aspect of this case that influenced us in coming to our decision.
Although the hon. Gentleman opened the door by saying that this decision was

obviously a mistake and that I could therefore reasonably slide out of responsibility for it, I must make it clear that this was a very carefully thought about decision, and a very difficult decision to make, and that when we made it we appreciated that it would look an odd decision to the applicant and would cause him a certain amount of pain.
In planning appeals, however, it is very important to keep some sort of balance of decisions. To give an illustration of that point, I would point out that the hon. Gentleman mentioned the annoyance felt by Mr. Pople because the owner of Diamond Cottage seemed to be able to get away with it. The owner of Diamond Cottage got away with it, as the hon. Gentleman knows better than anyone else, though his constituent probably does not, because within the definition of the law it was not development. It therefore could be done without planning permission. That is a question of law on which I am advised the county was right. This applies to other types of planning appeal. People look at the cases very carefully, compare them with their own, and criticise the decisions as such.
The hon. Gentleman did rather casually mention that this building was in the green belt, but this, of course, is the nub of the problem. The last Government established green belts, they supported them, and carried out planning decisions in the context of green belts. We have done the same, and this green belt, although it had been proposed for some time, was approved by my right hon. Friend in 1965.
The problem of the green belt is that everybody recognises that it is important, if we are to keep the countryside, that we should stop sporadic development, and everybody recognises that if one looks at certain parts of the countryside one can say, "There is country that is ruined because there was no control and because there was sporadic development." It is one thing to say that, but quite another to say in any particular case, "It is fair that my particular bit of development should not have been allowed". As the hon. Gentleman put it—and it is an argument which must have been put to the hon. Gentleman when he had my job—"What earthly wrong is there in allowing this particular development?" The point is that one


has to have rules governing development in the green belt and they must be fair as between applicant and applicant.
The hon. Gentleman may remember "New Houses in the Country". I do not think he wrote it, but at any rate he used it, and this makes it quite clear that in the green belts there is very strict control over development. That is their point. Control of development must be specially strict. In some villages, it will not be allowed at all. In others, it may be allowed in particular places. Away from villages, even the filling in of small gaps in ribbons of small houses may have to be prevented, as may be the building of one or two new houses in the grounds of existing houses. It is no good the hon. Member decrying his constituency and saying that it is not all that beautiful; but it is at least the best they have got. They have decided in their wisdom that it should be green belt. This decision was taken before this appeal was decided.

Mr. Corfield: I am grateful, but we are talking about replacing an existing building. A lot of my constituency is very beautiful, but this does not happen to be the most beautiful part of it. This green belt is designed to stop the expansion of Bristol and is not due to any particular merit of the countryside.

Mr. MacColl: The planning authority having decided that this should be green belt, and my right hon. Friend having approved that it should be green belt, whether it is preserving intrinsic beauty or giving a lung to the people of Bristol, amounts to saying that there is special control over development, unique and different from anywhere else, and it is the first duty of anyone thinking of development in an area of this sort to find out precisely what is allowed and what is not allowed.
In this booklet, also, there is a reference to alterations. It says:
In some cases planning permission is needed for the improvement or extension of an existing house.
It goes on to say:
It cannot be assumed that planning permission will invariably be given for a new or substantially new house on the site of an old one.
This is the generally recognised principle from which green belt control is adminis-

tered. Clearly one reason for this, and a reason why one has to be careful in these cases, is that the very fact of having a green belt puts great site value on a building in the green belt. The fact that one has a green belt both makes it a very attractive area for a new house and makes it a common thing for people to acquire an old house and try to modernise and to add as much as possible within the law, without coming within the definition of development, and if one says, "Where-ever you have an existing house, you can replace it," one has a situation where virtually derelict houses are acquired and one could go on and provide houses which would last for a very long time. Therefore, we would get not only a continuation of building in an area where it was not desirable to encourage building, but there would also be a feeling of injustice between the people who had been able to do this and those who had not.
I accept that Mr. Pople was not a skilled builder, in the sense that he did not know the ropes. He did not know about finding out whether this was green belt and finding out what was involved in that. I think it is a pity he did not make all the inquiries. He said that he was going into this as a commercial operation, that he was not building something for himself—not at that stage, anyway, though subsequently he changed his mind. It is important that people who go into this kind of operation should find out what are the limits within which they can do what they want to do.
The hon. Gentleman said that there was nothing wrong in this house, except that it needed a damp-proof course. That was the reason why it had been necessary to treat it in this drastic way. What Mr. Pople said in his statement was:
The property was in a very bad state of repair. It also had creeping damp. The only thing I could do was to put a damp course in. This I intended to do, and this is why I took part of the building down.
In fact, the evidence we have is that it was completely down at the time when the appeal was considered. The hon. Gentleman suggested one thing that Mr. Pople could do. He said he would advise him, no doubt with his great skill, how to do it. If he did this, it would of course be examined with great care and dispassionately, without regard to any previous decisions assumed about it, but I would be misleading the hon. Gentleman


if I implied that I could make a bargain and say, "This is a formality. It will go through." We took this decision, looking at the site and considering it most carefully.
There are two other possibilities. First, he might serve a purchase notice. I am sure the hon. Gentleman could advise him about that, and I will not take time explaining the technicalities. Secondly, he might be able to sell the site to the owner of Diamond Cottage for incorporation in the curtilage of that dwelling.
I would like to end by saying that I am extremely sympathetic to Mr. Pople. I can understand the great disappointment 11,, had and the great worry that this has caused him, but I must say that in the time I have held this job—a job which the hon. Gentleman also has held—I have more and more come to the conclusion that in deciding planning appeals—it is a public duty which we are performing for the community—one cannot be too far influenced by personal cases and by personal difficulties. We

have got a duty to support a planning authority where it is carrying out a clearly laid down policy. There was a development plan. The authority defined the kind of development which could be allowed. We approved of that. This project did not conform with it. It would have meant bringing a modern building with a long life into an area which the planning authority thought ought to be Green Belt and ought to remain so.

Mr. Corfield: I wonder whether I might point out that, as I understand it, there was never any intention to increase the size of the dwelling. In fact, the intention was to decrease it.

The Question having been proposed after half-past Nine o'clock on Monday evening and the debate having continued for half an hour. Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at ten minutes past Twelve o'clock.